Canada’s main stock index is trading lower on Monday, as investors continue to assess the outlook for talks to end the war in Iran amid a fresh bout of military strikes.
The S&P/TSX 60 index standard has fallen by 6 points, or 0.3%. The Toronto Stock Exchange’s S&P/TSX composite index has declined 110 points or 0.3%.
The Toronto Stock Exchange’s S&P/TSX composite index advanced by 0.7% to 34,758.57 on Friday, with investors appearing to shrug off data showing an unexpected contraction in the Canadian economy in the first quarter. The TSX average gained 2.4% in May, its second consecutive monthly uptick.
U.S. stocks mixed
U.S. stock markets are mixed on Monday, suggesting an extension to gains notched at the end of the prior trading week, even as new strikes in the Middle East rattled hopes for an immediate ceasefire extension deal between the U.S. and Iran.
Sentiment was bolstered by artificial intelligence chipmaking titan Nvidia’s announcement of a new cutting-edge processor designed for PCs. The launch buoyed already sky-high enthusiasm around AI that has helped equity markets weather headwinds from the Iran war in recent weeks.
By 12:15 ET (16:15 GMT), the Dow has declined by 153 points, or 0.3%, the S&P 500 is flat, and the Nasdaq has advanced by 40 points, or 0.2%.
The main averages on Wall Street gained in the prior session, logging fresh record closing higher as well as an uptick for the both the month and week. Results from Dell helped underpin the rally on Friday, with investors cheering the company’s decision to lift its annual profit and revenue forecasts. Chipmaking stocks, in particular, powered a jump in the wider tech sector.
U.S. and Iran trade fresh strikes
The prospects of an imminent peace deal in the Middle East have been tempered by yet another exchange of military strikes.
The U.S. military has said it bombarded radar and drone control sites in Iran, following a move by Tehran to shoot down an American drone over the weekend, the Associated Press reported. Iran confirmed that it has launched a further strike in retaliation and Kuwait flagged that it had intercepted drone and missile fire, the AP said.
Elsewhere, Israel has pushed to expand its occupation of a section of neighboring Lebanon, responding to drone launches by Iran-aligned Hezbollah militants.
U.S. President Donald Trump has stressed that he believes Iran wants to reach an agreement, with both sides continuing to negotiate over key sticking points, particularly Tehran’s nuclear ambitions. Trump is now reviewing a proposed memorandum of understanding which would reportedly extend an ongoing ceasefire, call for shipping to restart in the Strait of Hormuz, and offer a framework for discussing Iran’s nuclear program.
Iran’s chief negotiator flagged on Sunday that Tehran would not accept an agreement that does not secure its rights.
Brent rises
Against the backdrop, Brent crude futures, the global oil benchmark, marched higher once again.
While the potential U.S.-Iran ceasefire extension has kept oil prices below recent peaks above $100 a barrel, the Brent contract remains well above pre-war levels. Analysts at Vital Knowledge have suggested that this is a reflection of the belief that, even if a deal is reached, shipping activity in the Strait of Hormuz is not likely to recover for months, while Iran’s stranglehold over the conduit will maintain a geopolitical risk premium in oil markets.
Oil prices have been a focal point for investors since the start of the Iran war in late February. The effective closure of the Strait of Hormuz, a vital waterway for a fifth of the world’s oil and natural gas, drove up energy prices, sparking worries over a burst of inflationary pressure hitting countries around the world.
Gold falls
Meanwhile, gold prices dropped.
Concerns have abounded that an energy-induced burst of inflation will persuade central banks to raise interest rates, a trend which could bode poorly for non-yielding assets like gold.
Markets are currently pricing in that the Fed will lift rates at least once this year, according to Reuters, citing CME’s FedWatch Tool.
At the same time, a firmer U.S. dollar has threatened to make bullion more expensive for overseas buyers, denting the yellow metal’s appeal.
Away from the war, shares of chipmaking groups Intel, Advanced Micro Devices and Qualcomm retreated in premarket trading, after Nvidia unveiled a new processor for Microsoft’s Windows operating platform which will be used in a line of laptops and desktop PCs. The launch presents a potential new challenger in the market for AI PCs.
Shares of software stocks, notably Microsoft, rallied.
Nvidia CEO Jensen Huang announced the new line of "superchips" -- the RTX Spark -- during a keynote address at the COMPUTEX conference in Taiwan on Monday.
The RTX Spark will include Nvidia’s new N1X processor, which is a custom processor made with Microsoft and designed by Taiwanese firm MediaTek. The processors will be based on chip designer Arm’s platform.
Huang said the chips were aimed chiefly at running locally hosted artificial intelligence agents, and that Nvidia had collaborated with Windows on the software platform.
source https://www.investing.com/news/stock-market-news/tsx-slides-on-iran-peace-talks-uncertainty-4719864
