Investing.com – Futures linked to Canada’s main stock index edged down on Monday as tensions once again flared up between the U.S. and Iran.
By 08:09 ET (12:09 GMT), the S&P/TSX 60 index standard futures contract had fallen by 11 points, or 0.6%.
On Friday, the S&P/TSX composite index gained 0.9% to end at 34,346.29, the highest closing level since a record-high notched on March 2, thanks to announcements — which appear to be short-lived — that the Strait of Hormuz had been reopened.
This capped off a 1.09% gain for the week for the index, its fourth consecutive weekly increase.
U.S. futures slip
U.S. stock futures also pointed lower. By 07:30 ET (11:30 GMT), the had shed 292 points, or 0.6%, S&P 500 futures had dropped by 40 points, or 0.6%, and had dipped by 138 points, or 0.5%.
The main averages on Wall Street advanced by more than 1% to end the prior week, touching all-time highs. Bolstering sentiment were announcements from both U.S. and Iranian officials that the Strait of Hormuz, a critical waterway for a fifth of the world’s oil, was once again available to commercial shipping traffic after weeks of closure.
Optimistic rhetoric also surrounded a potential deal to extend a ceasefire between the U.S. and Iran which is due to expire later this week, fueling anticipation that the conflict may be winding down to a permanent conclusion.
Oil climbs amid Iran peace talk uncertainty
Yet uncertainty now swirls around these once-buoyant peace prospects as the new trading week gets underway.
President Donald Trump said an Iranian-flagged cargo ship had been seized by American forces, claiming the vessel was attempting to run a U.S. blockade of Iran’s ports and coast. Tehran responded by threatening to retaliate and suggested that it would not be taking part in possible negotiations with the U.S. later this week.
Trump also warned that the U.S. could “blow up all power plants and bridges” in Iran if Tehran failed to agree to a peace deal.
Following a series of conflicting statements from Iranian officials in recent days, it is also now unclear whether a weekslong closure of the Strait of Hormuz had indeed been lifted, or if Iran had once again blocked the bottleneck. Data from Kpler showed more than 20 ships crossed the strait on Saturday, the most since March 1, although Iran has declared that the chokepoint has been shuttered once again because of the U.S. blockade.
“[D]evelopments over the weekend suggest the thaw has been short-lived,” analysts at ING said in a note to clients.
Against this backdrop, oil prices climbed, reversing a steep fall late last week sparked by announcements that the Strait of Hormuz had been reopened.
Brent oil futures, the global benchmark, were last higher by 5.1% at $95.02 a barrel, while ticked up by 6.1% to $87.64 a barrel.
Gold slips
Gold prices declined, as the uptick in oil prices fed inflation worries and a stronger U.S. dollar weighed on bullion’s appeal to overseas buyers.
was lower by 0.5% at $4,807.42 an ounce, while had slipped by 1.1% to $4,827.36 an ounce.
Gold had logged mild gains last week amid growing optimism over a U.S.-Iran peace deal, although this notion was largely quashed after Iran closed the Strait of Hormuz again over the weekend.
The yellow metal still remained squarely in a $4,700-$4,900/oz trading range established over the past two weeks, as investors weighed an unfavorable rate outlook and rapid developments in the Middle East.
Earnings flood ahead
A slew of corporate results in the U.S. scheduled to be released this week could also shed more light on how the war is impacting the outlook for some of the biggest names in Corporate America.
Steel producer posted better-than-expected first-quarter revenue, buoyed in part by higher average selling prices.
Analysts will also be keeping tabs on earnings this week from groups like credit-card provider , chipmaker , healthcare giant , defense player , and electric vehicle manufacturer .
On Thursday, U.S. business activity data for April is set to be unveiled, after the reading weakened in March.
“Looking ahead, a combination of geopolitical developments, key U.S. data, and major earnings releases – particularly from Big Tech – could set the tone for markets and potentially trigger sharp moves across asset classes,” Lukman Otunuga, Head of Market Research at FXTM, said.
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