The geopolitical risks in the Middle East continue to ferment, and the volatile oil prices create a double-edged sword effect on resource-based markets, putting pressure on the Canadian stock market.
Market Performance
On Friday, TSX futures fell by about 0.5%, and the S&P/TSX Composite Index continued its weakness, potentially marking its third consecutive week of decline.
The spot index has dropped to its lowest point since January 30, with a cumulative decline of over 7% since the outbreak of the Iran conflict.
Energy Drivers and Structural Impact
Brent crude oil has risen by more than 50% since the conflict began, significantly boosting the Canadian energy sector, which has accumulated a gain of over 38% this year.
However, the rise in oil prices also exacerbates macroeconomic uncertainty, suppressing the overall stock market, especially amid unclear global growth prospects.
As a resource-export-oriented economy, Canada is highly sensitive to energy price fluctuations, amplifying market volatility further.
Commodities and Safe-Haven Assets
Precious metals showed divided trends, with gold remaining relatively stable while silver fell by about 2%, reflecting a tug-of-war between safe-haven demand and industrial demand expectations.
Policy Environment
The major central banks, including the Bank of Canada, kept interest rates unchanged this week but emphasized that if inflation rises again, they will reconsider the path of rate increases.
Individual Stocks and Institutional Ratings
Among individual stocks, Interfor Corp and AutoCanada drew attention. CIBC raised Interfor's rating to "neutral" while lowering AutoCanada's rating to "neutral," reflecting a cautious attitude toward the prospects of cyclical industries.
