The S&P/TSX Composite Index fell 1% on Thursday, slipping below the 33,000 mark as optimism for a quick resolution in the Middle East faded following signals from US President Trump of escalating attacks on Iran. Oil prices rebounded sharply on renewed supply concerns, stoking fears of stagflation.
Canadian government bond yields moved higher as investors priced in a more hawkish stance from the Bank of Canada and other major central banks. The prospect of tighter monetary policy weighed on banking stocks amid worries about softer credit demand. Royal Bank of Canada declined nearly 1%, TD Bank shed more than 0.5%, and Bank of Montreal lost about 1.5%.
Gold prices pulled back from two-week highs after Trump signaled continued US military action in Iran. Among miners, Agnico Eagle fell more than 2.6%, while Wheaton Precious Metals (WPM) slid nearly 3.5%.
In contrast, energy producers advanced on the back of higher crude prices. Canadian Natural Resources gained about 4%, and Suncor Energy rose more than 3%.
