TSX Futures Slip as Oil Tops $100, Inflation Concerns Mount

Futures contracts tied to Canada’s main stock index declined in early trading Wednesday, as a sharp rise in crude oil prices above $100 a barrel intensified investor concerns about persistent inflation. Traders are also cautiously awaiting a key U.S. inflation report later this week, which could influence future central bank policy.

By 06:52 ET, S&P/TSX 60 index futures had fallen by 8 points, or 0.4%. The move follows a retreat in the S&P/TSX Composite Index on Tuesday, which was dragged down by losses in financial and industrial stocks. Shares in e-commerce giant Shopify also extended declines, hitting their lowest closing price since July 29.

Oil Prices and Geopolitical Risk

The primary driver for market anxiety was a spike in energy prices, with Brent crude, the global oil benchmark, trading around $100.70 a barrel. The surge is linked to an escalation of conflict in the Middle East, which threatens to disrupt global supply.

According to reports, Iran’s Islamic Revolutionary Guard Corps launched strikes against a U.S. military base in Jordan and attacked multiple ships near the Strait of Hormuz, a critical channel for global oil transport. The action followed reports of the U.S. striking several Iranian oil tankers, heightening fears of a prolonged conflict that could keep energy prices elevated.

Inflation Jitters and Trade Headwinds

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The climb in oil prices is fanning fears of accelerating energy-driven inflation just as central banks weigh their next moves on interest rates. Market pricing now indicates a roughly 60% probability that the U.S. Federal Reserve will implement a 25-basis-point rate hike next week, up from 40% a week ago, as policymakers signal a commitment to curbing price pressures.

Adding to the negative sentiment, an intensifying trade dispute between the United States and Canada has darkened the economic outlook. Washington has reportedly implemented a new ban on some Canadian imports, following retaliatory tariffs from Ottawa that took effect recently.

Broader Market Tone

The cautious mood was reflected in U.S. markets, where stock futures also traded lower. Elsewhere, spot gold prices rose 1.0% to $4,397.47 an ounce, supported by a softer U.S. dollar, which can make the precious metal more attractive to overseas buyers.