TSX futures inch lower as traders eye Middle East violence, Fed comments

Investing.com - Futures linked to Canada’s main stock exchange edged lower on Thursday, as investors assessed ongoing violence in the Middle East and a key interest rate decision by the Federal Reserve.

By 06:41 ET (10:41 GMT), the S&P/TSX 60 index standard futures contract had slipped by 5 points, or 0.3%. U.S. financial markets are due to be closed for the Juneteenth holiday.

In the prior session, the Toronto Stock Exchange’s S&P/TSX composite index rose by 0.07% to 26,559.85 points, boosted by health care, information technology, industrial and real estate shares.

The Fed chose to leave interest rates steady at a range of 4.25% to 4.5% following the conclusion of its latest two-day meeting on Wednesday, although official projections indicated that policymakers still expect to draw down borrowing costs this year.

In an update to its all-important "dot plot", rates are still expected to slide by 50 basis points in 2025, matching prior predictions in March and December. Yet the pace of reductions next year and in 2027 was slowed, signalling that the Fed could be gearing up for a longer fight to bring inflation down to its 2% target.

Chair Jerome Powell warned that the impact from Trump’s sweeping tariff agenda is likely coming, and could lead to a "meaningful" uptick in consumer price growth.

Canadian stocks were choppy in the wake of Powell’s comments, with the S&P/TSX paring back some of its earlier gains.

Markets also remained on edge as traders eyed the possible involvement of the U.S. in an intensifying conflict between Israel and Iran.

Crude gains

Oil prices have advanced in recent days due to the fighting, with fears surrounding its potential impact on crucial crude supply flows out of the Middle East.

On Thursday, oil prices continued to edge up. At 06:57 ET, Brent futures climbed 0.9% to $77.38 a barrel and U.S. West Texas Intermediate crude futures rose 0.9% to $74.19 a barrel.

Direct U.S. involvement in the Israel-Iran violence could widen the conflict, putting energy infrastructure in the region at higher risk of attack, especially key shipping lanes in the Strait of Hormuz.

Goldman Sachs (NYSE:GS) on Wednesday said a geopolitical risk premium of about $10 a barrel is justified given lower Iranian supply and risk of wider disruption that could push Brent crude above $90 a barrel.

Gold subdued

Gold prices were muted as the Fed’s decision strengthened the dollar and pressured bullion, while rising geopolitical risks losses.

Spot gold rose 0.1% to $3,374.21 an ounce, while gold futures for August declined 0.5% to $3,390.85/oz by 06:58 ET.