TSX Futures Rise as Declining Oil Prices Boost Investor Sentiment

Futures tied to Canada’s benchmark stock index climbed on Monday, supported by a significant decline in oil prices that eased investor concerns about inflation and spurred a rally in global bonds.

As of 07:20 ET (11:20 GMT), the S&P/TSX 60 index standard futures contract had gained 13 points, or 0.6%. The move follows a mixed session on Friday, where the Toronto Stock Exchange’s S&P/TSX composite index closed down 0.2% but managed to finish the week with a gain, breaking a four-week losing streak.

Oil Prices Drive Market Action

The primary catalyst for Monday's positive sentiment was a pullback in the energy market. Benchmark Brent crude futures tumbled 2.5% to $101.24 a barrel, a notable drop after trading near $110 last week.

This decline was largely attributed to a rebound in supply. Data from shipping analytics firm Kpler indicated that Saudi oil exports have recovered to over 4 million barrels per day so far in September, a significant increase from 2.4 million bpd in August. The lower oil prices helped alleviate worries about a sustained global tightening cycle from central banks, leading to a rally in bond markets.

Focus on Bank of Canada

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Investors are also looking ahead to domestic economic signals. Bank of Canada Governor Tiff Macklem is scheduled to speak later in the day, with his comments being closely watched for clues on future monetary policy.

Market expectations currently show traders are pricing in approximately a 60% probability of an interest rate hike at the central bank's next meeting in October. Later this week, fresh retail sales data will provide further insight into how Canadian households are contending with inflationary pressures, which could influence the Bank of Canada's decision.

Broader Market Context

Sentiment was also positive in the U.S., where stock futures pointed to a higher open. Optimism around demand for artificial intelligence continues to be a supportive theme, though some analysts noted the gains were "a bit confounding" given some negative AI-related headlines over the weekend, according to a note from Vital Knowledge.

Elsewhere, gold prices retreated as a firmer U.S. dollar and expectations for further Federal Reserve rate increases weighed on the non-yielding metal. Spot gold fell by 0.3%, according to the source.