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TORONTO – Canada’s main stock index edged lower Thursday while U.S. markets also lost ground as geopolitical concerns sent oil prices higher.
Uncertainty continues over the U.S. war with Iran and when oil tankers will once again be able to freely exit the Persian Gulf. U.S. President Donald Trump threatened Iran with “the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY” late Wednesday but provided few details.
The October crude oil contract was up US$2.44 at US$86.83 per barrel.
“The real issue right now is that the threat overhangs the market, that hostilities could recommence,” said Steve Locke, chief investment officer for fixed income and multi-asset strategies at Mackenzie Investments.
“In particular, it’s the flow of shipping through that region that is most of concern in the context of oil supplies, energy supplies and other goods that transit through the strait.”
The S&P/TSX composite index was down 36.37 points at 36,365.42. The losses were broad, led by the financial sector.
Meanwhile, Canada-U.S. Trade Minister Dominic LeBlanc returned to Washington on Thursday to meet again with U.S. Trade Representative Jamieson Greer as work continues to finalize a deal to avert a new round of U.S. tariffs.
Trump announced Tuesday that he was pausing punishing new tariffs on Canada for three days pending the finalization of a new trade deal. The new tariff deadline if the documents aren’t finalized is 12:01 a.m. ET Saturday.
“Markets certainly don’t like to see a continuation of the trade war, the tit-for-tat tariff increases,” Locke said.
“Ultimately, coming through close to the deadline with a verbal agreement, with the details to follow, was something that the market experienced some relief on.”
Details of the deal are scant, but it is expected to address U.S. tariffs on steel, aluminum, lumber, and autos, some U.S. concerns about limited access to Canada’s dairy market, as well as Canada’s retaliatory tariffs on autos and provincial bans on U.S. alcohol imports.
In the U.S. market, relief that swept the bond market just a day earlier disappeared on Thursday.
The bond market remains the centre of the action after yields charged higher through the summer. U.S. Treasury Secretary Scott Bessent made a surprise move Wednesday that brought some temporary relief. His department said it will at least double the size of its planned purchases of longer-term Treasuries from Sept. 9 through Nov. 4.
The buybacks were “relatively underwhelming,” Locke said.
“And ultimately the market is reflecting that in its movement today in yields. This seems to be the major driver of what’s happening in the equity market today as yields have risen to put pressure on stocks,” Locke said.
The 10-year Treasury yield rose to 4.70 per cent from 4.65 per cent late Wednesday. It’s almost back to its 4.71 per cent level from late Tuesday, before the Treasury Department made its announcement.
The Dow Jones industrial average was down 703.84 points at 52,759.21. The S&P 500 index was down 66.82 points at 7,641.16, while the Nasdaq composite was down 263.92 points at 26,067.17.
The Canadian dollar traded for 72.54 cents US compared with 72.34 on Wednesday.
The December gold contract was up US$26.10 at US$4,571.40 an ounce.
This report by The Canadian Press was first published Aug. 20, 2026.
—With files from The Associated Press
Companies in this story: (TSX: GSPTSE, TSX: CADUSD)
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