Global Markets Tumble as Middle East Tensions Escalate and Trade War Intensifies

Canadian investors are bracing for a potentially volatile day as global markets react to escalating tensions in the Middle East and a brewing trade war between Canada and the US. The TSX is expected to open lower, following major North American markets that closed down yesterday amid the escalating trade war.

US President Donald Trump issued a sweeping ban on imports of Canadian alcohol, motorcycles, and some dairy products in response to Ottawa's countertariffs that came into effect yesterday. This move has curbed risk appetite, causing Brent crude to hit the key US$100-per-barrel level for the first time since July 24.

Hamad Hussain, senior climate and commodities economist at Capital Economics, noted that market participants are pricing in a more prolonged conflict in the Middle East as well as the risk that the latest escalation in military strikes disrupts oil flows from the region. Brent crude futures were up 2.8% to US$100.70 a barrel.

The Canadian dollar strengthened against its US counterpart, trading at $1.3782 per US$1. The yield on the US 10-year note was last up at 4.812%. Meanwhile, spot gold was up 1.1% at US$4,401.60 an ounce.