The s&p/tsx composite index is moving cautiously at the start of the week as investors weigh renewed Middle East tensions, firmer oil prices, and a busy morning of services data in Canada and the United States. In early trading on Monday, April 6, the s&p/tsx composite index was in focus after Canadian stocks finished the previous session with gains and the benchmark closed at 33, 108.
Markets Turn Guarded Before Key Data
Global markets opened the week on edge after U. S. President Donald Trump warned of “hell” for Iran unless it reopens the Strait of Hormuz by his self-imposed deadline. A report of a push for a ceasefire eased some nerves, but market sentiment remained fragile as traders kept a close watch on shipping disruptions and the risk of further escalation.
Wall Street futures were mixed after a holiday-shortened trading week, while TSX futures edged higher. Japan’s Nikkei closed 0. 55 per cent higher, and overseas markets in Europe and Hong Kong were shut for a holiday. Oil prices eased in choppy trading, with Brent crude futures down 0. 5 per cent to US$108. 50 a barrel and West Texas Intermediate futures 1. 11 per cent lower at US$110. 30 a barrel.
What Is Driving the s&p/tsx composite index
The s&p/tsx composite index has been reacting to the same forces that pushed Canadian stocks higher late last week: stronger gains in healthcare, energy, and utilities, even as weaker metals prices weighed on mining shares. The benchmark rose nearly 150 points, or 0. 5 per cent, in the prior session and posted nearly 3. 6 per cent gains for the week, its second straight winning week and best weekly performance in four months.
Transcontinental jumped nearly 9 per cent after announcing the acquisition of PDI Group, while Curaleaf, MDA Space, and Parex Resources each rose by at least 5 per cent. On the other side of the ledger, Rogers Communications, goeasy, Air Canada, and Bombardier slipped by at least 4. 9 per cent.
Investor Mood Remains Sensitive
“The markets are obviously nervous, ” said Sim Moh Siong, currency strategist at OCBC in Singapore. “We’ve seen many of these deadlines being pushed out, and it’s difficult to tell to what extent this deadline is going to stick, or will it be pushed out too, ” he added. He also said there had been “a lot of de-escalation hope, ” but that some of it “has fizzed out over the weekend” as threats intensified.
In currency trading, the Canadian dollar strengthened against its U. S. counterpart, while the U. S. dollar index slipped 0. 15 per cent. The yield on the U. S. 10-year note was last up at 4. 339 per cent.
What Comes Next For The s&p/tsx composite index
Investors are heading into the day with two scheduled releases in view: Canada’s S&P Global Services PMI for March at 9: 30 a. m. ET and the U. S. ISM Services PMI for March at 10: 00 a. m. ET. With no major Canadian economic releases due later this morning, attention is likely to remain on the Strait of Hormuz, oil shipments, and whether the s&p/tsx composite index can hold its recent momentum if headlines turn more tense.
