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TSX, US Stocks Fall as Renewed Middle East Tensions Drive Oil Prices Higher
Summary
Canadian and U.S. stock markets declined on Wednesday following a sharp rise in oil prices amid escalating tensions between the United States and Iran. The geopolitical uncertainty also pushed gold prices lower as investors weighed potential central bank responses to inflation.
Canada’s main stock index and U.S. markets fell on Wednesday as renewed conflict in the Middle East roiled global markets. By early afternoon, the S&P/TSX composite index had dropped approximately 1.5%. In the United States, the Dow Jones Industrial Average was down 1.4%, with the S&P 500 and Nasdaq also trading lower.
The market downturn followed reports of Iranian attacks on U.S. military sites in Kuwait and Bahrain, which Iran described as retaliation for recent American actions. Investor anxiety was further amplified by comments from U.S. President Donald Trump who, speaking at a NATO summit, declared that a fragile interim peace agreement with Iran was "over."
The escalation in hostilities sent crude oil prices soaring on concerns of supply disruptions and rising energy-driven inflation. Brent crude, the global benchmark, jumped 7% to $79.30 a barrel, while West Texas Intermediate crude gained 6.5% to trade at $75.02 a barrel. This reversed a recent trend of lower prices that followed the preliminary peace deal.
AdIn contrast, gold prices retreated, with spot gold dipping 1.5%. The move came as investors speculated that renewed inflation worries could prompt the U.S. Federal Reserve to raise interest rates, which typically diminishes the appeal of non-yielding assets like gold. Market participants are now awaiting minutes from the Fed’s June meeting for further insight into its policy direction.