Canada's main index broke a record close Tuesday before a fresh round of US-Iran air strikes wiped out gains the following session
The TSX hit a record close on Tuesday, then handed it back the very next day.
According to Reuters, the S&P/TSX composite index surged 434.57 points, or 1.3 percent, to 35,169.46 on June 3, eclipsing its previous record close of 34,830.89 set on May 25,
The rally was broad-based: energy rose 2.4 percent, materials and financials each gained 1.6 percent, and Celestica Inc climbed nearly 11 percent to its own record high.
Financials, materials, and energy combined account for 69 percent of the TSX's market weighting.
"It's blasted through 35,000 and kept on going," said Colin Cieszynski, chief market strategist at SIA Wealth Management, adding that broad sector participation was exactly what Canadian markets needed.
Canada sent a letter to the US and Mexico recommending a 16-year renewal of the United States-Mexico-Canada Agreement, Reuters reported.
The letter also called for parallel talks on sectoral tariffs, ahead of a bilateral meeting with US trade negotiators.
The gains evaporated on Wednesday.
The composite index fell 367.92 points, or 1.1 percent, to 34,801.54 as the US and Iran exchanged another round of air strikes, threatening the fragile ceasefire.
The July crude contract settled at US$96.02 per barrel, up US$2.26 on the day, while Brent crude rose 1.9 percent to US$97.81, per BNN Bloomberg.
Anish Chopra, managing director at Portfolio Management Corp., told the same outlet that markets had shifted to risk-off mode, with stocks lower, oil higher, bond yields rising, and the US dollar firming.
"Middle East tensions are causing investors to be more concerned about inflation risk," he said.
The yield on the 10-year Treasury climbed to 4.49 percent from 4.46 percent the prior day and from just 3.97 percent before the war began.
Technology shares led the TSX lower Wednesday, falling 3.5 percent, with Constellation Software down 4.7 percent and Shopify ending 3 percent lower despite announcing an additional US$3bn share buyback, Reuters reported.
Materials fell 3.2 percent as gold and copper prices declined, while financials lost 0.6 percent.
Josh Sheluk, portfolio manager at Verecan Capital Management, said markets are pricing Middle East tensions as "a tail risk," and would be "a lot lower" if full escalation were seen as the most probable outcome.
Adding to Wednesday's headwinds, according to Reuters, the Trump administration proposed new tariffs of up to 12.5 percent on imports from 60 economies over forced-labour concerns, a move US trading partners rejected.
