Investing.com - Futures linked to Canada’s main stock exchange pointed higher on Tuesday as news of a ceasefire between Israel and Iran helped push investors back into riskier assets.
By 06:23 ET (10:23 CET), the S&P/TSX 60 index standard futures contract had risen by 8 points, or 0.5%.
The S&P/TSX composite index climbed by 111.79 points, or 0.4%, at 26,609.36 on Monday, just shy of a record close touched on June 12.
Recent comments from Federal Reserve officials bolstered hopes for an earlier-than-anticipated interest rate cut, while markets largely interpreted weekend U.S. air strikes on Iranian nuclear sites as a contained, one-off event.
A dip in oil prices, fueled by expectations that the Israel-Iran fighting will not impact crucial crude supply flows through the Middle East, weighed on energy names. However, materials stocks, including fertilizer groups and metal miners, rose, as did the technology and consumer discretionary segments.
Meanwhile, Canadian Prime Minister Mark Carney suggested that the U.S. and Canada may have an opportunity to sign a new economic and defense agreement, but flagged that nothing has yet been assured.
U.S. futures climb
U.S. stock futures rose Tuesday, with sentiment boosted by President Donald Trump’s announcement of a ceasefire in hostilities between Israel and Iran.
By 06:33 ET, the Dow Jones futures traded 294 points, or 0.7%, higher, S&P 500 futures gained 49 points, or 0.8%, and Nasdaq 100 futures advanced 225 points, or 1.0%.
The main averages on Wall Street ended the prior session in the green, all registering gains of around 1%, boosted by hopes that U.S. involvement in the days-long Israel-Iran air war would remain relatively subdued.
Ceasefire optimism boosts Wall Street
Investors have been boosted by Trump declaring earlier Tuesday, via social media, that the ceasefire between Israel and Iran was now "in effect," adding that neither side should violate it.
The statement has lifted expectations that the 12-day bout of fighting that has included deadly air strikes has now come to an end.
However, Trump’s comments suggested that the ceasefire would take place in stages, with operations already underway being allowed to finish.
Still, questions surrounded the longevity of the ceasefire, with the Israeli military already warning that it has identified missiles launched from Iran towards Israel and was ready to retaliate. Iran has denied the claim, according to local media reports.
Powell’s testimony on tap
Away from the elevated geopolitical tensions, investors will focus on Federal Reserve Chair Jerome Powell, who is due to begin two days of testimony before Congress later in the session.
Powell will likely be grilled on the Fed’s decision to keep rates unchanged at its latest meeting and adopt a wait-and-see attitude to future borrowing cost changes. Policymakers, including Powell, have been especially wary of the uncertainty surrounding the impact of Trump’s aggressive tariff agenda.
Trump continued his ongoing campaign against Powell on Tuesday, writing on social media that Powell is a "very dumb, hardheaded person." He called for rates to be brought down by at least "two to three points," arguing that the U.S. will pay for Powell’s "incompetence."
Trump’s stance on lower rates has received some backing from Fed policymakers, with Michelle Bowman stating overnight that she was open to cutting rates in July, while Christopher Waller said he would also consider a rate cut next month.
Tesla stock continues to gain
In the corporate sector, Tesla (NASDAQ: TSLA ) shares added to Monday’s strong gains in premarket trading after the company officially launched its long-awaited Robotaxi service in Austin, Texas, using a small fleet of 10 to 20 Model Y vehicles.
Chewy (NYSE: CHWY ) stock fell premarket after the pet food and products retailer announced an underwritten public offering of $1 billion of its Class A common stock through JPMorgan (NYSE: JPM ). Concurrently, Chewy also agreed to a $100 million share repurchase program.
KB Home (NYSE: KBH ) stock fell after the homebuilding company lowered its full-year housing revenues guidance to the range of between $6.3 billion to $6.5 billion. Previously, the company had predicted a range of between $6.6 billion to $7 billion.
Crude falls
Crude prices fell Tuesday on hopes of an end to the Iran-Israel conflict, alleviating worries of supply disruptions in the Middle East, a major oil-producing region.
At 06:36 ET, Brent futures dropped 2.7% to $68.61 a barrel and U.S. West Texas Intermediate crude futures fell 2.5% to $66.79 a barrel -- although both contracts trimmed earlier losses after Israel accused Iran of violating the ceasefire.
Both the oil benchmarks settled over 7% lower in the previous session after rallying to five-month highs after the U.S. attacked Iran’s nuclear facilities over the weekend, and have continued to drop, falling to their lowest in two weeks.
Iran is OPEC’s third-largest crude producer, and the easing of tensions could allow it to export more oil and prevent supply disruptions.
Gold drops amid fading safe-haven demand
Gold prices slipped over 1% in European trade, as fading geopolitical tensions prompted investors to shift away from safe-haven assets.
Spot gold declined 1.3% to $3,326.54 an ounce by 06:39 ET, dipping to its lowest level since June 11. Gold futures for August dropped 1.6% to $3,340.72/oz.
Meanwhile, news of the ceasefire put the U.S. dollar on the back foot, with an index tracking the currency against a basket of its peers inching down by 0.4% to 98.06.
The euro and the yen strengthened, buoyed by the slide in oil prices. Both the European Union and Japan rely on imports of crude, while the U.S. is a net exporter.