TORONTO — Canada's main stock index closed down along with U.S. markets Friday as investors turned cautious following Israeli attacks on Iranian nuclear and military targets.
The attacks, which prompted Iran to fire missiles at Israel in retaliation, raised fears the conflict could escalate further and led to a spike in the price of oil.
"It's clearly a risk-off situation, and a spot where people that maybe want to take a little bit of risk off the table have the opportunity to do so," said Dustin Reid, chief fixed income strategist at Mackenzie Investments.
The price of oil, already rising this week, spiked over fears of supply and trade disruptions, with the August crude oil contract up US$4.65 at US$71.29 per barrel.
Higher oil prices helped soften the effects of the pullback on the S&P/TSX composite index, which closed down 111.40 points at 26,504.35 but was less affected than U.S. markets, noted Reid.
"You see materials and energy, subcomponents here within the TSX doing a little bit better, and keeping the index probably, you know, outperforming versus others."
The TSX energy index was up 2.8 per cent and gold stocks moved higher as the metal also rose, helping offset losses in most other sectors including financials, telecoms and technology.
In New York, the Dow Jones industrial average was down 769.83 points, or 1.8 per cent, at 42,197.79. The S&P 500 index was down 68.29 points at 5,976.97, while the Nasdaq composite was down 255.66 points at 19,406.83.
A big concern for markets is that higher oil prices will put pressure on inflation, and in turn affect interest rate decisions, said Reid.
"It's not particularly constructive for the idea that central banks can cut rates any time soon."
The higher prices could also dampen consumer spending, while the wider situation also creates higher degrees of uncertainty, he said.
"It's probably not great for global sentiment, consumer sentiment," said Reid.
"So I am a little bit concerned here that the gains that have been had over the last handful of weeks, could be somewhat at risk."
The Canadian dollar rose, trading for 73.54 cents US compared with 73.46 cents US on Thursday, thanks in part to higher oil prices, but it didn't move as much as it might have because investors fled to the U.S. dollar for safety, said Reid.
"The Canadian dollar is surprisingly flat, kind of net net today, against the U.S. dollar anyway," he said.
"We are seeing a decent bid for the U.S. dollar on safe haven, which has not been the case particularly since early April."
The Canadian dollar wasn't helped by manufacturing sales data out Friday that showed a fall of 2.8 per cent in April, the largest monthly drop since October 2023, as the tariff dispute with the United States hit the industry.
"The organic Canadian economy is slowing, and will continue to slow, and you can see it across different spots of the economy, manufacturing clearly being one," said Reid.
The July natural gas contract was up nine cents US at US$3.58 per mmBTU.
The August gold contract was up US$50.40 at US$3,452.80 an ounce and the July copper contract was down three cents US at US$4.81 a pound.
This report by The Canadian Press was first published June 13, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press
