(RTTNews) – Reversing the gains from yesterday’s session, Canadian stocks slumped on Wednesday as a fresh exchange of attacks between the U.S. and Iran since yesterday and the resultant uncertainty on a U.S.-Iran peace deal compelled investors to adopt a “wait and watch” strategy.
After opening below yesterday’s close, today the benchmark S&P/TSX Composite Index traded firmly negative throughout the session before settling at 34,935.80, down by 336.79 points (or 0.95%).
Four of the 11 sectors posted gains today, with the energy sector leading the pack.
Global markets calmed since June 17 when the U.S. and Iran signed a Memorandum of Understanding to halt their mutual attacks temporarily and resolve their hostility through negotiations over a 60-day period.
This interim agreement paved way for the immediate reopening of the Strait of Hormuz. Hundreds of ships laden with oil cargo and stranded at sea due to the closing of the seaway, started moving to their respective destinations.
As a result, oil-linked inflationary concerns started to ease and crude oil prices nosedived for the past few weeks.
However, yesterday, the U.K. Maritime Trade Operations center announced that three vessels were hit by unknown projectiles in separate incidents while transiting the Strait of Hormuz.
As a response, U.S. Central Command conducted a barrage of attacks on various targets in Iran.
In retaliation, Iran’s Islamic Revolutionary Guards Corps claimed to hit more than 85 sites linked to the U.S. military in Kuwait and Bahrain.
Speaking on these developments, in Turkey, U.S. President Donald Trump called the peace talks with Iran “over,” but he allowed the negotiators of the U.S. to continue to engage in talks with Iran. In strong words, Trump termed the negotiations with Iran as a “waste of time.”
Later, Trump also warned that the U.S. could seek to capture Iran’s principal oil exporting terminal, Kharg Island and added that if required U.S. forces may target desalination plants in Iran. He also vowed to hit Iran hard tonight.
The next round of U.S.-Iran peace talks which were planned to be scheduled for any day after the burial of Iran’s late Supreme Leader Ayatollah Ali Khamenei tomorrow are now in limbo.
As the U.S.-Iran crisis alternates from military escalation and diplomacy back and forth, investors prefer to monitor the next phase of developments before undertaking risky bets.
Following these sudden developments which renewed crude oil supply-related concerns, oil prices skyrocketed to more than $75 levels.
Aside from the Middle East developments, focus of Canadian investors is also on how the negotiations on the Canada-United States-Mexico Agreement on free trade pans out.
The pact is now to be continued but with annual reviews after the U.S. administration refused to renew it in its current form.
Major sectors that gained in today’s trading were Energy (3.78%), Consumer Staples (1.29%), Utilities (0.98%), and Communication Services (0.31%).
Among the individual stocks, Enerflex Ltd (5.71%), Headwater Exploration Inc (5.64%), Cenovus Energy Inc (5.45%), Vermilion Energy Inc (4.74%), and The North West Company Inc (3.99%) were the prominent gainers.
Major sectors that lost in today’s trading were IT (0.71%), Consumer Discretionary (0.87%), Real Estate (1.07%), Financials (1.86%), and Materials (3.16%).
Among the individual stocks, Aris Mining Corporation (8.06%), Eldorado Gold Corporation (7.31%), Seabridge Gold Inc (6.16%), and Onex Corporation (3.78%) were the notable losers.
Methanex Corp (6.21%) and Enerflex Ltd (5.71%) were among the prime market-moving stocks today.
