Canada’s key equity gauges were firmer on Wednesday, with the S&P/TSX 60 and the broader S&P/TSX composite both up roughly 0.6% by mid-day as market participants awaited a major Federal Reserve policy decision and digested preliminary provisions of a U.S.-Iran framework.
By 12:12 ET (16:12 GMT), the S&P/TSX 60 index had advanced 11 points, or 0.6%, while the S&P/TSX composite traded 218 points, also up about 0.6%. The composite had hit a fresh record in the prior session, driven in part by gains among financial and metal-mining companies. Those gains came alongside a retreat in crude oil prices that helped ease some inflation concerns among investors.
Across the border, U.S. equities hovered near flat. At 12:13 ET, the Dow Jones Industrial Average was higher by 0.4%, while the S&P 500 and Nasdaq Composite were only a touch above the flatline. Analysts at Vital Knowledge characterized the session as a continuation of a positive, if subdued, tone for equities, noting that markets were trading on hope that optimism tied to the Iran memorandum of understanding could persist for several weeks.
Trading sentiment appeared muted relative to the volatile start of the week, which featured the announcement of an interim agreement intended to end the more than three-month conflict in the Middle East. The prior session closed with mixed outcomes for major U.S. averages: both the S&P 500 and Nasdaq finished lower, while the Dow notched a new record-high close.
Fed decision and projections dominate calendar
Front and center for markets was the conclusion of a two-day Federal Open Market Committee meeting. The central bank was widely expected to keep its policy rate unchanged in a 3.5% to 3.75% range when the meeting concluded - a decision that would represent the first policy action under new Chair Kevin Warsh.
Warsh, an appointee of President Donald Trump, was depicted in market commentary as positioned between the White House’s appetite for aggressive rate reductions and emerging signs of inflationary pressure linked to energy markets that could argue for higher borrowing costs. His predecessor, Jerome Powell, remained a Fed governor after leaving the chair, with Powell said to have cited legal threats against him and the central bank as part of the reason for staying on.
Earlier in the year, cooling inflation had led many investors to anticipate a series of rate cuts in 2026. But the onset of a joint U.S.-Israeli military action in late February - and the subsequent closure of the Strait of Hormuz - produced an oil shock that rekindled concerns over renewed price pressures. Market participants were set to pore over the Fed’s quarterly economic projections, which could shed light on the level of dissent among policymakers on the path for rates.
Analysts at BofA Securities forecast that the projections would likely show a combination of higher inflation, lower unemployment and no rate reductions this year. The BofA note also indicated that a minority of policymakers would probably project further rate increases.
Details of U.S.-Iran framework emerge
Officials and media reports outlined a 14-point framework agreement between the United States and Iran that focused on a permanent ceasefire - including in Lebanon - and the removal of an American naval blockade. A central element involved the reopening of the Strait of Hormuz, a development that would facilitate the return of Iranian oil to world markets.
The draft accord was described as paving the way for subsequent negotiations on Iran’s nuclear program, with those talks slated to begin after a formal signing ceremony later in the week. Provisions reportedly include immediate waivers for Iranian oil and petrochemical exports upon signing, unfreezing of Iranian assets and a regional reconstruction package on the order of $300 billion, according to business press accounts.
In exchange, Tehran would commit not to pursue a nuclear weapon and to neutralize its enriched uranium stockpile. Reporting suggested that the extent of financial relief extended to Iran would be linked to Tehran’s compliance with U.S. demands related to its nuclear materials and broader ambitions.
Following the unfolding details, Brent crude futures steadied after several sessions of declines. By 08:08 ET, Brent was trading up 0.8% at $79.54 a barrel. The contract had slipped below $80 on Tuesday for the first time since March but remained above price levels recorded before the outbreak of conflict.
Gold and the dollar respond
Gold continued a run of gains, extending into a fourth straight session. Spot gold rose 0.7% to $4,362.04 an ounce by 12:15 ET, while gold futures were higher by 0.7% at $4,382.80 an ounce. Lower crude prices reduced the perceived risk of an energy-fueled surge in inflation, which in turn weighed on expectations for tighter monetary policy - a dynamic that typically supports non-yielding assets like bullion.
Gold also benefited from a softer U.S. dollar, making the yellow metal relatively more affordable to buyers using other currencies.
SpaceX and chip names draw attention
In U.S. premarket trading, shares of SpaceX rose more than 3%, suggesting an extension of an already strong post-IPO rally. On Tuesday, SpaceX vaulted up market capitalization rankings, briefly overtaking some major technology companies in implied valuation. The stock closed that session up 4.83% at $201.80, implying a market capitalization near $2.65 trillion - roughly $8 billion greater than the market value of Amazon at the same close.
SpaceX had priced its initial public offering at $135 per share on June 12 in what was reported to be the largest IPO ever, initially raising $75 billion. The Tuesday close left the stock up about 50% from its IPO price in four trading sessions.
Elsewhere, shares of semiconductor firms Intel and Broadcom moved higher in premarket trade, indicating tentative signs of stabilization after a sector tracker experienced its second-weakest session of the year in the prior trading day.
Market context and outlook
Overall, the session on Wednesday reflected a market balancing act between macroeconomic signals and geopolitical developments. In Canada, the intraday lift in the S&P/TSX indices echoed gains in cyclical sectors such as financials and metal-mining, while commodity markets reacted to the prospect of renewed oil flows from Iran. In the United States, headline moves were restrained as investors awaited the Fed’s policy decision and fresh guidance from the central bank’s updated economic outlook.
With several moving parts - the Fed’s rate outlook, the specifics of the U.S.-Iran framework and ensuing shifts in energy and safe-haven asset prices - market participants appeared to be parsing headlines carefully and positioning for potential volatility in the days ahead.