Canadian stock-index futures extended losses on Tuesday as investors weighed escalating Middle East tensions and the looming U.S. tariff deadline against Canada. The S&P/TSX Composite Index fell 299.99 points, or 0.8%, to 36,367.93, marking its third consecutive daily decline and its lowest close since August 6.
Geopolitical risks remained elevated after negotiations between the U.S. and Iran failed to yield progress, raising concerns over potential disruptions to oil shipments through the Strait of Hormuz. Analysts at Deutsche Bank noted that the absence of a clear catalyst for the declines reflected investor pricing in the risk of an extended closure of the strategic waterway. Brent crude futures held above $90 per barrel on Tuesday.
The Trump administration’s threat to impose 50% tariffs on a range of Canadian exports, including wine and furniture, added to market caution. The new duties are scheduled to take effect just after midnight Eastern Time, intensifying trade-related headwinds for Canadian equities. The S&P/TSX Capped Materials Index, which includes metal miners, led declines with a 2.2% drop, while the gold sector fell 1.6%. Financials and technology also retreated, down 1.1% and 2.3%, respectively.
North American benchmarks mirrored the cautious tone. The S&P 500 declined 0.7% to 7,694.31, while the Dow Jones Industrial Average slipped 0.2% to 53,343.64. U.S. 30-year Treasury yields approached a 19-year high, reflecting persistent concerns over inflation and monetary policy.
Domestic inflation data showed Canada’s Consumer Price Index rose 3% year-over-year in July, accelerating from 2.8% in June. The Federal Reserve left its benchmark rate unchanged at 3.50%-3.75% following its July 28-29 meeting, with three policymakers dissenting in favor of a hike. Investors will monitor Wednesday’s release of the Fed’s latest meeting minutes for further clues on policy direction.
