TSX Closer: Index Rebounds From Selloff but Remains Below Record High as U.S.-Iran Conflict Clouds Economic Outlook

04:30 PM EST, 03/04/2026 (MT Newswires) -- The Toronto Stock Exchange closed higher Wednesday, partially recovering from the previous session's sharp selloff, though the benchmark index remained below Monday's record high as investors continued to monitor geopolitical developments and commodity markets.

The resources-heavy S&P/TSX Composite Index closed up 157.92 points, or 0.47%, to 33,942.86, rebounding from Tuesday but remaining below Monday's record close of 34,541.27.

Most sectors finished higher over Wednesday's session. Information Technology led the gainers, up 2.16%, followed by Financials, up 0.49%, Telecom, up 0.49%, Base Metals, up 0.40%, Energy, up 0.28%, and Health Care, up 0.18%. Base Metals led decliners, down 7.91%, followed by Industrials, down 0.66%, and Utilities, down 0.36%.

West Texas Intermediate (WTI) oil closed with a modest gain Wednesday after three straight days of advances, as the United States took steps to reopen shipping through the Strait of Hormuz, a chokepoint for about 20% of global oil exports, amid ongoing tensions in the Middle East. WTI crude oil for April delivery rose US$0.10 to settle at US$74.66 per barrel, while May Brent crude was last seen down US$0.01 at US$81.39.

Gold edged higher on Wednesday, rebounding from a 3.5% drop a day earlier as markets steadied following two volatile sessions. Gold for April delivery was last seen up US$13.20 at US$5,136.00 per ounce. The precious metal fell sharply Tuesday as global equity markets swung lower and investors took profits or liquidated holdings to cover losses in stocks.

Meanwhile, National Bank of Canada said the economic consequences of the United States and Israel-led war against Iran and Lebanon are "highly uncertain" as many variables are unknown, particularly the duration and geographical extent of the fighting, but it anticipated a surge in energy prices.

"This lack of visibility makes it impossible to accurately quantify the medium-term impact, but it does not prevent us from identifying the main risk: a significant increase in international energy prices ... Pending greater clarity on the geopolitical situation, we have only marginally revised our global growth forecasts. We expect real GDP to expand 3.4% this year and 3.3% in 2026," the bank added.

Canadian Prime Minister Mark Carney said the current conflict is another example of the failure of the international order.

"Iran's nuclear threat remains, and now the United States and Israel have acted without engaging the U.N. or consulting with allies, including Canada."," Carney said during a visit to Australia in a speech at the Lowy Institute think tank in Sydney.

Against the backdrop of global uncertainty, economists are also examining the outlook for Canada's domestic economy. Bank of Montreal (NRGD) said the country is still dealing with the burden of U.S. tariffs, though the impact is uneven across regions and economic conditions are beginning to diverge.

The bank is forecasting 1.3% real gross domestic product growth this year, down slightly from 1.7% in 2025. While activity around the turn of the year struggled, conditions should gradually improve over the course of the year, with firmer growth and an ebbing unemployment rate.

Additionally, attention also turned to comments from Bank of Canada Governor Tiff Macklem on the growing role of non-bank lenders in global financial markets.

The rise of non-bank players like hedge funds and private credit in the global financial system has brought clear benefits by adding liquidity and flexibility to debt markets, Macklem said on Wednesday at a Global Risk Institute event in Toronto. However, the shift away from the regulated banking sector has also increased risks to financial stability, he noted.

Non-bank players have taken on a bigger share of the credit market and are not as closely monitored as traditional banks. According to the governor, two areas that deserve closer attention are leveraged trading by hedge funds in government bond markets and the rapid expansion of private credit.

The BoC on Wednesday said it will join the Canadian Collateral Management Service tri-party platform for its domestic repo operations by early 2027. This reaffirms its commitment to resilient and well-functioning repo markets, wrote the bank in a statement.

In addition, the BoC said it intends to join the Canadian Derivatives Clearing Corporation to centrally clear its repo operations, following the completion of the TMX's investments to modernize its central clearing services to facilitate broader adoption by a wider range of participants.

Elsewhere, new data highlighted the continuing strain in Canada-U.S. trade relations.

One year after the United States imposed tariffs on Canadian goods, half (52%) of Canadian small businesses no longer consider the U.S. a reliable trading partner, according to new data from the Canadian Federation of Independent Business (CFIB) released on Wednesday.

Three-quarters (75%) of small businesses say the tariff fight has strained their relationships with U.S. partners or clients, up sharply from 49% in March 2025, noted CFIB.

The recent U.S. Supreme Court decision on tariff rates doesn't change the situation for most Canadian exports, but it will bring some much-needed relief to the 27% of businesses hurt by tariffs on non-CUSMA-compliant goods, it stated.

In economic data, Statistics Canada said the labor productivity of Canadian businesses edged down 0.1% quarter over quarter in Q4 as hours worked declined at a slower pace than real gross domestic product (-0.2%).

The Q4 labor productivity decline was right in line with a consensus figure provided by Scotiabank. The Q4 drop contrasts with the previous quarter, in which labor productivity rose 1.1% as output increased with fewer hours worked, the statistical agency said.

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