TSX futures climb amid market cheer for Iran peace plan reports
Investing.com - Futures linked to Canada’s main stock index rallied on Wednesday, powered by hopes for a resolution to the almost month-old Iran conflict.
By 08:03 ET (12:03 GMT), the S&P/TSX 60 index standard futures contract had risen by 27 points, or 1.4%.
The S&P/TSX composite index gained 0.2% on Tuesday, extending an uptick logged in the preceding session, finishing at 31,941.59. However, the average remains 7.5% below its all-time peak notched on March 2.
U.S. futures advance
Major U.S. stock futures pointed higher. By 07:11 ET, the Dow futures contract had risen by 439 points, or 1.0%, S&P 500 futures had climbed by 58 points, or 0.9%, and Nasdaq 100 futures had risen by 250 points, or 1.0%.
The main averages on Wall Street Wall Street all slipped in the prior session, with investors attempting to gauge the likelihood of a halt to hostilities between joint U.S.-Israeli forces and Iran. Fighting has continued unabated, while the U.S. has begun to send more military units to the Middle East and some Washington allies in the Persian Gulf have reportedly been urging President Donald Trump to keep prosecuting the war.
Tehran has rejected Trump’s claims of "very strong" recent negotiations between the two sides, accusing the president of using the prospect of peace talks to soothe volatile financial markets.
Traders have been fretting over the possible economic fallout from a prolonged war, a sentiment underlined by preliminary U.S. business activity data for March. S&P Global’s flash purchasing managers index fell to an eleven-month low and pointed to growing pressure on overall growth from rising prices linked to a war-related energy shock.
The impact may not be centralized in the U.S., either. Separate PMIs for the Eurozone warned of "ringing stagflation alarm bells," referring to an economic trend of stubborn inflation and stagnating growth.
Oil slides
Still, optimism around a potential resolution to the war appeared to be in vogue early on Wednesday.
Driving these hopes were media reports that mediators from Turkey, Egypt and Pakistan are attempting to arrange talks between officials from the U.S. and Iran by Thursday.
With Trump reportedly keen to find an off-ramp from the war, the U.S. is said to have presented Tehran with a 15-point peace plan. Along with demands for Iran to dismantle its main nuclear sites, the U.S. is also calling for the reopening of the Strait of Hormuz, a vital waterway south of Iran that has been effectively closed to tanker traffic for weeks, driving up energy prices and threatening to ignite inflationary pressures in countries around the globe.
Reports said Iran has set a high bar for negotiations, including the establishment of fee collection from ships traversing the strait. An Iranian military spokesperson appeared to cold water on a possible immediate resolution as well, saying the U.S. is only “negotiating with” itself.
Despite the muddled messaging, a hallmark of the conflict, Brent crude futures fell. By 07:16 ET, futures expiring in May for Brent, the global oil benchmark, had retreated by 6.4% to $97.78 a barrel. Although the contract has declined back below the key $100 a barrel threshold, it remains well above levels of roughly $70-per-barrel before the outbreak of the war in late February.
Gold climbs
Gold prices rose on Wednesday, bolstered by a drop in oil prices and a slightly weaker U.S. dollar, but gains were capped by still-elevated Middle East tensions.
Spot gold was up 1.8% at $4,553.25 an ounce by 06:48 ET (10:48 GMT). U.S. Gold Futures jumped 3.5% to $4,587.82.
Lower energy costs can dampen bond yields and weaken the dollar, both of which tend to benefit non-yielding assets such as gold. The U.S. dollar index, which tracks the greenback against a basket of six currency peers, fell 0.1%.
"Easing oil prices and a softer U.S. dollar added support," analysts at ING said in a note.
But the analysts flagged that, in the near term, gold remains "highly sensitive" to currency moves and geopolitical developments, as well as how traders expect the Federal Reserve to react to energy-related inflation fears.
Chevron, Exxon Mobil retreat
In individual stocks, oil giants Chevron and Exxon Mobil both dipped by more than 1% in premarket U.S. trading, reflecting the decline in broader oil prices. United Airlines, Delta Air Lines and other travel stocks rose, while gold and silver mining stocks -- which have been hit by a slide in precious metals during the conflict -- also gained. Cruise operator Carnival Corp. ticked higher as well.
Meanwhile, Chewy reported fourth-quarter adjusted earnings that significantly exceeded analyst expectations, sending shares in the online pet supplies retailer up sharply premarket.
The company posted adjusted earnings per share of $0.27 for the fourth quarter, beating the analyst consensus of $0.09. Revenue reached $3.26 billion, matching analyst estimates and representing an 8.1% increase on a normalized 13-week basis compared to the prior year period.
Elsewhere, drugmaker Merck said it had agreed to purchase Terns Pharma in a $6.7 billion deal in a bid to boost its cancer treatment pipeline.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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