Canadian and U.S. markets posted their strongest rally in over a year after President Trump announced a fragile two-week ceasefire with Iran, sending oil prices plunging over 16 percent. The S&P/TSX Composite Index jumped more than 200 points, closing above 33,695 as energy fears that had gripped investors for weeks evaporated in a single session.
WTI crude dropped to $94.41 per barrel while Brent fell to $94.75, marking the steepest single-day decline since April 2020. The ceasefire agreement hinges on Iran immediately reopening the Strait of Hormuz, a critical waterway that handles roughly 20 percent of global oil flows. The strait had been effectively closed during the conflict, creating a severe supply disruption that pushed oil to record highs above $144 per barrel in physical markets.
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Canadian energy stocks took an immediate hit. Suncor Energy gained 0.6 percent on Friday but faces pressure as the war premium deflates. Canadian Natural Resources rose 1 percent before the announcement but remains vulnerable to sustained price declines. Energy stocks had surged earlier in 2026 on elevated oil prices, making the sector one of the year’s top performers with gains approaching 30 percent. That rally now faces a major test.
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Financial stocks led the TSX higher as inflation fears eased. Royal Bank of Canada and TD Bank each climbed 0.5 percent, benefiting from lower bond yields and reduced concerns about potential rate hikes. The 10-year Treasury yield fell sharply to 4.2 percent from 4.4 percent weeks earlier, offering relief to banks worried about credit demand destruction. Investors should monitor Strait of Hormuz shipping data closely. Any breakdown in the ceasefire could reverse gains quickly and reignite volatility across Canadian markets.
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