Canada's main stock index retreated from recent highs on Tuesday, with the Toronto Stock Exchange's S&P/TSX composite index closing down 177.02 points, or 0.5%, at 34,653.87. According to reports from Reuters, this marked the end of a four-day winning streak that included a record closing high on Monday. The pullback came as investors grew more cautious about prospects for an early deal to end the Iran war, with geopolitical tensions continuing to influence market sentiment. Meanwhile, U.S. markets showed mixed performance with the S&P 500 rising 45.65 points to 7,519.12, while the Nasdaq composite climbed 312.21 to 26,656.18, setting new all-time highs. The Dow Jones Industrial Average dipped 118.02 to 50,461.68. As per IG chief technical analyst Axel Rudolph, falling yields and retreating oil prices on hopes of a US-Iran ceasefire extension helped US stock indices kick off the week on a strong footing as traders returned from a long weekend.
The technology sector led the decline, falling 1.6% with shares of Constellation Software down 3.2%. As reported by Reuters, the financial sector, which is the most heavily weighted sector, ended 0.6% lower. Consumer staples also declined significantly, falling 1.8%, while the materials group, which includes metal mining shares, was down 0.9%. The price of gold fell 1.4%, while oil settled 2.8% lower at $93.89 a barrel after clawing back some earlier declines. In contrast, U.S. markets saw Micron Technology's stock leap 19.3% to top US$895.88 after UBS raised their 12-month price target to US$1,625 from US$535, with the company already having more than tripled in value this year. The Nasdaq composite rallied 1.2% to set its own record, while the S&P 500 climbed 0.6% after trading resumed following Monday's holiday. New York stocks opened firmly higher, led by tech companies on the Nasdaq Composite, with the index up 0.95% in initial trading, as chip and AI-linked stocks topped early leaderboards.
The market retreat was partly attributed to ongoing geopolitical developments, with Iran saying the United States had violated a ceasefire after the U.S. conducted what it called defensive strikes in southern Iran. According to Reuters, U.S. Secretary of State Marco Rubio said negotiating a deal to halt the conflict could 'take a few days'. Market analyst Shiraz Ahmed from Sartorial Wealth noted there's a sense of political exhaustion setting in, but Canadian investors are trying to continue with their long-term growth plans. The geopolitical tensions continue to influence global markets, with Japan's Nikkei 225 falling 0.2% from its all-time high set the previous day. Stock markets in much of the rest of the world pulled back from their gains as fighting continued in the region and the U.S. military said it carried out "self-defence" strikes in southern Iran, including on missile launch sites and boats placing mines.
Canada's largest banks are due to begin reporting quarterly results on Wednesday, with their profits expected to have increased despite trade tensions, the Iran war and broader economic uncertainty. As reported by Reuters, however, banks now face tougher tests as more consumers struggle to pay debts and a subdued housing market weighs on their core domestic business. The energy sector added 0.3%, recouping some of Monday's sharp losses.
Oil prices showed mixed movements with the price for a barrel of Brent crude, the international standard, rising 3.5% to US$96.67, while U.S. crude oil fell 2.8% to settle at $93.89. Oil prices have been at the centre of financial markets' action since the United States and Israel attacked Iran in late February, with the ensuing war closing the Strait of Hormuz and keeping oil tankers pent up in the Persian Gulf. United Airlines rose 6%, and Norwegian Cruise Line Holdings steamed 4.9% higher as hopes for improved oil flow helped lift stocks of companies with big fuel bills. Meanwhile, consumer confidence edged downward in May, following a report on Friday that said sentiment among U.S. consumers hit its lowest level on record, though the number was not as bad as economists expected. Asian stocks are mixed this morning with small losses slightly outnumbering small gains, while oil prices are well down on recent levels.
