Trump extends Iran deadline; investor reaction remains muted; Canadian TSX stock index futures decline

Investing.com - On Friday, futures linked to major Canadian stock indices fell slightly, as U.S. President Donald Trump further delayed the critical deadline for attacking Iran, providing only limited comfort to investors.

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As of 8:25 AM Eastern Time (20:25 Beijing Time), the S&P/Toronto 60 Index futures contract was down 7 points, a decrease of 0.4%.

On Thursday, the S&P/Toronto Composite Index closed down 1.5%, at 31,887.52 points, with the index expected to decline more than 7% in March.

U.S. futures decline

On Friday, U.S. stock index futures were lower. As of 7:33 AM Eastern Time, Dow futures were down 169 points, a decline of 0.4%; S&P 500 futures were down 27 points, a decrease of 0.4%; and Nasdaq 100 futures were down 148 points, a drop of 0.6%.

Major Wall Street indices suffered significant losses in the previous trading session, reportedly due to ongoing efforts to end the Iran conflict that have lasted nearly a month, with uncertain outcomes.

Fighting in the Middle East continues, with the Strait of Hormuz effectively closed, and the region’s critical energy facilities facing the threat of airstrikes. Israel and Iran launched attacks on each other on Friday, while the Pentagon has been amassing resources in the Middle East, leading some market participants to believe that the U.S. could launch a ground invasion of Iran.

Trump extends Iran deadline

Later on Thursday, Trump announced that the White House had extended the deadline for Iran to reopen the Strait of Hormuz or face an attack on its energy facilities to April 6.

Trump posted on Truth Social that the extension was at the request of the Iranian government and added that Tehran was engaged in “ongoing” negotiations with the U.S., with progress being “very smooth.” He insisted that claims contrary to media reports were “incorrect.”

Last weekend, Trump issued an ultimatum to Iran, vowing to strike the country’s power plants if it did not lift the blockade of the Strait of Hormuz. The Strait of Hormuz is a vital waterway through which about one-fifth of the world’s oil is transported. Trump later stated that after what he described as “very tough” discussions with Iran, he would delay taking action until Friday.

Tehran has publicly denied engaging in any such negotiations with Washington.

G7 diplomats were scheduled to meet in France on Friday, and the White House’s call for international assistance to help lift the blockade of the Strait of Hormuz could become a major topic of discussion. So far, these requests have largely been dismissed.

Markets will also be watching for the final data on the University of Michigan’s consumer confidence index for March, which could provide more insight into how American households expect to be affected by the conflict in the Middle East.

Oil prices rise

Crucially, the Strait of Hormuz remains effectively closed to tanker traffic, and energy facilities in the Persian Gulf region are still at risk of further attacks.

This has caused significant disruptions to supply in one of the world’s largest oil-producing regions, preventing countries globally from obtaining the import resources required by various industries.

As of 7:39 AM Eastern Time, the global benchmark Brent crude oil futures for May rose 2.5% to $110.77 per barrel. U.S. WTI crude oil futures also rose 2.2% to $96.56 per barrel.

Brent crude oil is expected to decline over the past five trading days, although it has recovered most of the losses earlier this week due to hopes of progress in peace negotiations. The contract price is also well above pre-war levels, raising concerns about surging inflationary pressures.

As a result, the market has nearly eliminated expectations for a rate cut by the Federal Reserve this year, even beginning to consider the possibility of an increase in borrowing costs in the coming months. Federal Reserve policymakers maintained interest rates last week but noted that energy shocks could pose a threat of accelerating inflation.

Against this backdrop, U.S. benchmark Treasury yields jumped to their highest level since July on Friday. As of 7:04 AM Eastern Time, the yield on the 10-year Treasury rose to 4.46%, up about 5 basis points. On Thursday, the 10-year Treasury yield rose by 9 basis points. Yields typically move inversely to bond prices.

Gold gives back gains

On Friday, gold prices retreated from some earlier gains as the dollar strengthened, with the market assessing the prospects of ending negotiations over the Iran conflict.

Spot gold recently rose 1.4% to $4,439.76 per ounce, having previously increased by about 2% during the Asian trading session. Gold futures rose 1.3% to $4,467.70 per ounce.

Over the past week, spot gold is still expected to decline by about 1.7%.

The strengthening dollar diminished gold’s appeal, as gold is typically viewed as a safe haven during times of geopolitical turmoil. Observers noted that gold’s shine may have dimmed since soaring to a historic high in January, after which the precious metal has fallen roughly 20%.

The sharp rise in oil prices due to supply disruptions caused by the effective closure of the Strait of Hormuz has heightened concerns about global inflation. This, in turn, reinforces expectations that central banks will keep interest rates elevated for a longer period. Gold typically performs poorly in a high-interest-rate environment.

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