Canadian stocks moved mostly lower on Wednesday after U.S. retaliation to Iran's downing of a U.S. helicopter and Iran's counter-attacks, led investors to wind up expectations on an amicable U.S.-Iran peace deal and an early reopening of the Strait of Hormuz.
After opening well-below yesterday's close, today the benchmark S&P/TSX Composite Index traded below the flatline throughout the session before settling at 34,151.32, down by 260.37 points (or 0.76%).
Five of the 11 sectors posted gains today, with the energy sector leading the pack.
The U.S.-Israel versus Iran war entered day number 103 today.
Yesterday, U.S. President Donald Trump stated that a deal with Iran could be signed in a day or two after which the Strait of Hormuz would reopen.
With supply-related concerns fading, the announcement revived market sentiments and the oil-linked energy sector slumped yesterday.
Hours after this, Trump messaged via Truth Social that Iran had shot down a U.S. Apache helicopter patrolling across the Strait of Hormuz and vowed that the U.S. must and will hit back.
U.S. Central Command confirmed through "X" that as an act of self-defense, U.S. forces targeted Iran's air defense, ground control stations, and surveillance radar sites close to the strait.
Today, Trump stated that Iran has delayed making a deal with the U.S. and asserted that it will pay the price for slowing the negotiations.
Iran's Foreign Minister Abbas Araghchi stated that the U.S. tested Iran's determination and Iran's military will leave no attack unanswered.
Iran's Islamic Revolutionary Guards Corps announced that it attacked the U.S. Navy's Fifth Fleet headquarters in Bahrain and four sites near the Al Azraq airbase in Jordan while Kuwait stated that it intercepted projectiles launched by Iran.
Economists are concerned now since the possibility of a U.S.-Iran deal and reopening of the Hormuz strait appears very low.
Soon after the war broke out on February 28, the strait was shut by Iran.
Several oil and energy tankers are still stranded at sea unable to transport their shipment from Arabian countries to their respective destinations.
Arab nations have scaled down their output due to the disability in transportation.
Consequently, oil prices have skyrocketed over the past three-plus months.
Since yesterday, crude oil prices soared again due to the renewed escalation concerns and the prevailing uncertainty has compelled investors to stay away from risky assets.
On the monetary front, as economists predicted, today the Bank of Canada left the benchmark overnight rate steady at 2.25%.
While the Bank Rate remains at 2.50%, the Deposit Rate stays at 2.20%.
In Q1 2026, Canada's Gross Domestic Product edged by 0.10%.
April's Consumer Purchase Index rose to 2.80%.
Continuing to monitor how the Middle East crisis evolves, the Governing Council expressed readiness to respond as needed.
Besides the developments in the Middle East, investors' concerns increased after Trump stated that he is not looking to renew the Canada-United States-Mexico Agreement. The CUSMA pact is up for a review on July 1.
Trump reiterated his earlier stance that the U.S. does not need any imports from Canada or Mexico.
For Canada, the renewal is crucial since it involves nearly $1.3 trillion in cross-border trade.
Further, the deal allows around 90% of Canada's exports to bypass the whopping tariffs imposed by Trump last year.
Major sectors that gained in today's trading were Energy (1.63%), IT (0.54%), Utilities (0.47%), Communication Services (0.38%), and Consumer Staples (0.29%).
Among the individual stocks, Constellation Software Inc (5.66%), Strathcona Resources Ltd (4.93%), Kelt Exploration Ltd (4.56%), AltaGas Ltd (2.08%), Superior Plus Corp (1.80%), and Alimentation Couche-Tard Inc (1.34%) were the prominent gainers.
Major sectors that lost in today's trading were Real Estate (0.45%), Consumer Discretionary (0.92%), Industrials (1.26%), Healthcare (1.36%), and Materials (4.02%).
Among the individual stocks, Dream Industrials REIT (2.54%), Brp Inc (4.10%), Curaleaf Holdings Inc (3.72%), Seabridge Gold Inc (10.04%), and Wesdome Gold Mines Ltd (8.63%) were the notable losers.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.