TSX Futures Plummet as Oil Prices Near $100 Amid Renewed Hostilities

The TSX futures plummeted as renewed U.S.-Iran hostilities pushed crude prices higher, exacerbating inflation risks and weighing on Canadian business sentiment. According to Canadian market data, the S&P/TSX Composite fell by 444.75 points, or 1.2%, to 35,825.73 on September 1.

The Bank of Canada has identified the Middle East conflict and higher fuel costs as direct pressures on Canadian businesses. In its second-quarter 2026 Business Outlook Survey, the central bank reported that business sentiment deteriorated after three quarters of improvement, while the share of firms expecting a recession over the following 12 months increased from 9% to 17%. Energy producers are benefiting from higher oil prices, with West Texas Intermediate averaging US$101 a barrel from May 7 to May 21, compared to US$65 between February 1 and February 27.

The central bank's Calgary consultations revealed that while elevated fuel costs and geopolitical uncertainty were weighing on businesses outside the energy sector, firms within the sector reported improved investment and production outlooks due to higher oil prices. The Bank of Canada also noted that Canadian inflation expectations rose as 44% of surveyed businesses expected inflation to exceed 3% over the next two years, up from 11% in the first quarter.