TORONTO 鈥� Canada's main stock index closed down despite strength in the energy sector, while U.S. markets also moved lower over rising fears that the conflict between Israel and Iran could escalate.
Markets had seen gains Monday as worries eased, but concerns once again ratcheted up after U.S. President Donald Trump called for unconditional surrender from Iran's leader and for the 9.5 million residents of the country's capital to flee.
"It's sort of a tense market, not panicky, but tense," said Brian Madden, chief investment officer at First Avenue Investment Counsel.
"Trump is saying everyone evacuate Tehran, and calling the National Security Council to the situation room, so I think the speculation in the commodity pits is that this conflict perhaps broadens."
The possible direct involvement of the U.S. in the conflict helped create a risk-off day where stocks sold off, though the TSX was down less than U.S. markets because the fears also led to a spike in oil prices.
The S&P/TSX composite index closed down 27.22 points at 26,541.39 points, as the energy index was up 1.7 per cent while other sectors fell.
Energy stocks were on the rise as the August crude oil contract was up US$3.02 at US$73.27 per barrel over fears of potential supply disruptions.
"The fear in the market is that you could have disruptions to the physical flow of oil commodities if, for instance, you have ships sunk in the Straits of Hormuz, which is a choke point where something like 20 per cent of the world's oil supply flows through every day," said Madden.
He said it was the physical risk that's driving up the price, while gold was not responding as much to the tensions.
"Gold generally is a good geopolitical risk hedge, but I think the fear is more narrowly concentrated on risk to oil infrastructure and physical flows today."
In New York, the Dow Jones industrial average was down 299.29 points at 42,215.80. The S&P 500 index was down 50.39 points at 5,982.72, while the Nasdaq composite was down 180.12 points at 19,521.09.
Markets fell not only on geopolitical tension, but also a U.S. retail sales report that showed weaker-than-expected results.
While many retailers on both sides of the border have been under pressure, Montreal-based Groupe Dynamite Inc. reported results that came in ahead of forecasts.
The retailer's results helped push the company's stock up almost 19 per cent on the day, and showed how companies that appeal to price-conscious shoppers can outperform in this market, said Madden.
"This fast fashion concept maybe is something that resonates with a value-conscious consumer, which, may be a younger consumer -- when you've got youth unemployment ages 15 to 24 at 30-year highs, this retailer probably over-indexes to this group," he said.
He said the results echo Dollarama Inc.'s results last week that crushed on key metrics.
"I think the value retailers are, you know, in the wheelhouse right now."
The Canadian dollar traded for 73.51 cents US compared with 73.76 cents US on Monday.
The July natural gas contract was up 10 cents at US$3.85 per mmBTU. The August gold contract was down US$10.40 at US$3,406.90 an ounce and the July copper contract was down three cents at US$4.81 a pound.
This report by The Canadian Press was first published June 17, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press
