The Toronto Stock Exchange was down Thursday for only the second time in twelve sessions on some profit taking, but also on lingering concerns around what impact the war on Iran will have on markets, as National Bank revised down its global growth forecast for 2026.
The S&P/TSX Composite Index closed down 103.76 points, or 0.3%, to 34,052.23, even with most sectors higher, led by Telecom, up 1.1%, and Energy, up 1%, while Base Metals was up 0.2%. The Battery Metals Index was down 1.4%
The TSX had been buoyed by improved sentiment around the outlook for the Canadian economy, as shown by a largely enthusiastic response to news this week that the federal Liberal Party now had enough seats in Parliament to form a majority government, and now has a free hand to pushing through its economic agenda. Canadians will learn more about that on April 28 when the Liberals will provide a fiscal update and outline its economic plans.
Reflecting the improved sentiment, both Linamar (LNR.TO) and Martinrea International (MRE.TO) have within the last day maintained their full-year 2026 outlooks following the amendment of Section 232 tariffs on steel, aluminum and copper imports into the United States, which came into effect on April 6.
Still, National Bank of Canada says the Middle East crisis has been ongoing for too long to leave no mark on the global economy.
National Bank noted nearly seven weeks have passed since the United States and Israel launched their war on Iran, and although hopes for a negotiated peace between the warring parties have been revived in recent days, the bank said it is unlikely that the global economy will emerge from the crisis completely unscathed. For even though tensions have eased somewhat, the Strait of Hormuz remains effectively closed to shipping. Too many essential raw materials have therefore been stuck in the Persian Gulf for too long for global growth not to be affected in some way, it added.
Even if the strait could be reopened to shipping quickly, it would likely still take several weeks to restore the normal flow of these goods, National Bank said. Not only because of the time it takes for ships to make the journey between the Middle East and other parts of the world, but also because of the difficulties associated with restarting production, it added.
National Bank said while the economic consequences of the conflict will vary greatly from one country to another, they will nonetheless be negative on a global scale. That is why the bank revised down its global growth forecast for 2026, to 3.1% from 3.4%. This downward revision reflects less favorable outlooks in Europe and in emerging Asian countries. For 2027, the bank still expects global GDP to grow by 3.3%.
Of commodities, West Texas Intermediate crude oil rose on Thursday, but remained below the US$100 mark on hopes the United States and Iran will extend their ceasefire and resume talks to end war in the Middle East. WTI crude oil for May delivery closed up US$3.40 to settle at US$94.69 per barrel, while June Brent oil was up US$4.29 to US$99.22.
Gold prices weakened by midafternoon Thursday, remaining rangebound below US$5,000 as high oil and gas prices threaten to boost inflation and interest rates. Gold for May delivery was down US$15.40 to US$4,808.20 per ounce.