S&P/TSX composite closes up more than 350 points amid hopes of end to Iran war

Financial numbers flow on the digital ticker tape at the TMX Group in Toronto's financial district on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese

Canada’s main stock index ended more than 350 points higher on Monday, led by the basic materials sector, while oil prices fell as the United States and Iran appeared to be closing in on a deal to end the war in the Middle East.

The S&P/TSX composite index was up 359.53 points at 34,830.89.

“The TSX outperformed today,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James.

“We saw investors rotating a little bit into more of the materials, technology and industrial sectors across the board,” she said. Meanwhile, the energy sector lagged after oil prices pulled back sharply.

U.S. President Donald Trump said that negotiations with Iran are “proceeding nicely,” while reiterating his warning that fighting would resume if no deal is reached. That drove futures higher, though U.S. stock markets were closed on Monday for the Memorial Day holiday. 

“A lot of investors are encouraged by signs of progress toward the potential U.S.-Iran agreement,” Gardner said.

Tensions in Iran have kept the Strait of Hormuz effectively shut for about four months. The closure of the crucial waterway has prevented oil tankers from exiting the Persian Gulf to deliver crude to customers worldwide, pushing oil prices higher.

Depending on the swiftness of a deal, Gardner estimated oil prices could settle back down to around U$90.85 a barrel by the end of the year.

“If the Strait of Hormuz reopens, that would be a short-term pullback in the energy sector overall and we’re already starting to see that anticipation on today’s movement as well,” she said.

The July crude oil contract fell US$6.30 to US$90.30 per barrel; though there was no settlement price for crude oil and gold because of the holiday in the U.S.

Gardner said a pullback in crude oil prices shows the markets are becoming less worried about an immediate energy shock and more focused on improving risk sentiment.

“Attention is now going to be turned heavily toward the economic data and how this war has impacted the data in the short-term,” she said.

More eyes will be on Statistics Canada’s first-quarter gross domestic product report, which is expected to shape decisions on growth and overnight interest rates, Gardner said.

The fourth quarter GDP report was negative, she said. She said if the first quarter GDP data also turns out to be negative, “that will confirm we’re in a technical recession.” 

RBC senior economist Claire Fan said in a note that the economy likely returned to growth in the first quarter, estimating the GDP rose an annualized 1.7 per cent, supported by improving domestic growth drivers. 

That was slightly higher than economists’ average estimate of 1.5 per cent, according to LSEG Data & Analytics.

All of Canada’s Big Six banks are poised to report their second-quarter earnings this week, and are expected to deliver year-over-year gains despite a challenging operating environment and slowing loan growth.

Gardner said investors will be watching closely to see how the banks have “weathered the storm,” as delinquencies rise and mortgage renewals put more pressure on household budgets. 

The Canadian dollar traded for 72.44 cents US compared with 72.42 cents US on Friday.

Ritika Dubey, The Canadian Press.

This report by The Canadian Press was first published May 25, 2026.

— With files from The Associated Press