Oil jumps past US$78 while gold and financials drag the Toronto index to a one-month low
The S&P/TSX composite index dropped 336.79 points, or 1 percent, to close at 34,935.80 on Wednesday, its steepest one-day fall since early June, Reuters reported.
Renewed tensions between the US and Iran lifted oil prices and drove investors out of financial and mining shares.
US President Donald Trump, Reuters reported, said an interim agreement to end the war with Iran was "over" and that the United States was likely to launch fresh strikes on Wednesday night after Iranian attacks on US bases in the Gulf.
"We've said throughout that these ceasefires and truces are quite fragile," Brian Madden, chief investment officer at First Avenue Investment Counsel, told Reuters.
He said rebounding oil prices were fuelling "a risk-off impulse across all global equity markets, including Canada."
Heavily weighted financials lost 1.9 percent, the wire service said, and technology ended 0.7 percent lower.
The materials sector, which includes metal mining shares, fell 3.2 percent as the August gold contract dropped US$75.00 to US$4,082.40 an ounce.
Markets were focused on the prospect of higher inflation and interest rates, both headwinds for gold, even though geopolitical risks usually support the metal, Anish Chopra, managing director with Portfolio Management Corp, told BNN Bloomberg.
He said "Middle East risk is back into markets," transmitting through the price of oil.
Energy was one of just three sectors to finish higher, Reuters reported, adding 3.8 percent with support from Cenovus Energy and Canadian Natural Resources.
The August crude oil contract settled 4.4 percent higher at US$73.52 a barrel, as per the wire service, while BNN Bloomberg reported Brent crude climbed 5.2 percent to US$78.02 and briefly topped US$80, still below the near-US$120 peak reached earlier in the conflict.
Investors worried the hostilities could push Iran to again close the Strait of Hormuz to shipping, according to Reuters, blocking crude deliveries from the Persian Gulf.
Such a disruption, BNN Bloomberg reported, could worsen inflation and, in turn, force the US Federal Reserve and other central banks to raise interest rates.
Investors "may have become a little complacent" about geopolitical risk receding, Chopra said.
He said markets react not to geopolitics in isolation but to its implications for oil, inflation and interest rates.
South of the border, AP News reported, the S&P 500 fell as much as 1.1 percent after Trump called the ceasefire "over," then trimmed its loss to 0.3 percent once he said the recent fighting did not signal a return to full-scale war.
The index ended down 21.14 points at 7,482.71, while the Dow Jones industrial average fell 576.76 to 52,348.39 and the Nasdaq composite rose 51.96 to 25,870.65.
Steadying artificial-intelligence stocks helped offset the losses, according to AP News.
Nvidia rose 3.7 percent and, as the largest stock on Wall Street, exerted the strongest upward pull on the S&P 500.
Air Canada also weighed on the Toronto market, Reuters reported, after naming Anko van der Werff, head of Scandinavian airline SAS, as chief executive.
The carrier's shares fell 2.1 percent.
The Canadian dollar traded for 70.55 cents US, according to BNN Bloomberg, up from 70.43 cents US on Tuesday.
