Oil prices drove stock market volatility
The major North American indexes fell last week, with the TSX down 3.76%, the Dow losing 2.11%, the S&P 500 1.90% lower, and the Nasdaq down 2.07%, as sharp swings in oil prices and developments in the Middle East shaped investor sentiment. Year‑to‑date performance was also negative across the board, ranging from –1.24% for the S&P/TSX to –6.86% for the Nasdaq. Here’s a closer look:
Markets opened the week higher on Monday, with U.S. stocks rebounding from recent losses after oil prices pulled back. The bellwether S&P 500 rose just over 1.01%, the Dow gained nearly 0.83% and the Nasdaq climbed 1.22%. Canada’s TSX also advanced, closing 1.03% higher, supported by broad‑based gains across sectors.
Stocks extended modest gains on Tuesday, even as oil prices resumed their climb. The S&P 500 rose 0.25%, the Dow edged 0.10% higher and the Nasdaq gained 0.47%. Canadian equities also moved higher, with the TSX posting a modest gain of 0.16%, as investors anticipated upcoming interest-rate decisions from the Bank of Canada and the U.S. Federal Reserve (the Fed).
By Wednesday, sentiment weakened after oil prices rose again amid renewed concerns around global energy supply tied to the Middle East conflict. U.S. equities declined, with the S&P 500 and Nasdaq down 1.36% and 1.46%, respectively, while the Dow sank 1.63%. The TSX took the hardest hit, finishing 1.87% lower as energy‑related uncertainty returned to the forefront.
Markets remained under pressure on Thursday, though losses moderated later in the session, as oil prices pared earlier gains. Reports that Israeli Prime Minister Benjamin Netanyahu said his country would help the U.S. open the Strait of Hormuz, and that the war would end sooner than expected, buoyed sentiment. U.S. stocks ended the day lower, with the S&P 500 and Nasdaq each down 0.70%, while the Dow slipped 0.65%. The TSX declined more than 1.42%.
Selling pressure intensified on Friday, as another climb in oil prices weighed on risk appetite and heightened concerns that elevated energy costs could keep inflation higher for longer. U.S. equities fell sharply, with the S&P 500 down 1.51%, the Dow lower by 0.96% and the Nasdaq sliding 2.01%. Canadian equities also moved lower, with the TSX declining 1.69%, as investors grew more cautious about the outlook for inflation and interest rates.
Central banks held interest rates steady
On Wednesday, markets absorbed interest-rate decisions from North America’s central banks, both of which opted to hold policy rates steady amid a more uncertain inflation backdrop. The Bank of Canada announced it was maintaining its policy rate at 2.25%, noting that while inflation has eased in recent months, higher energy prices could push price pressures higher in the near term. Governor Tiff Macklem acknowledged that recent oil price increases are likely to feed into inflation data in the coming months, reinforcing a cautious policy stance.
The Fed also left its benchmark rate unchanged. In the policy statement accompanying the decision, officials signalled that while economic growth remains resilient, higher energy prices could complicate the inflation outlook. The Fed continues to anticipate rate cuts later in 2026, though it emphasized that future decisions will remain data-dependent. U.S. equity markets hardly changed following the announcement.
Canadian inflation cooled in February
Economic data released early in the week showed further easing in Canadian inflation, offering some near-term relief for households and policy-makers. Statistics Canada reported that consumer prices rose 1.8% year over year in February, down from January and slightly below expectations. The slowdown was driven by softer price pressures across several categories, suggesting that earlier rate hikes continue to work their way through the economy. However, economists cautioned that the recent rise in global energy prices could reverse some of this progress in the months ahead. Higher fuel and transportation costs may begin to filter through to consumer prices if elevated oil prices persist.
A professionally managed portfolio provides advantages in an uncertain economic environment
No matter the news headlines or market conditions, a professionally managed portfolio comes with a major benefit: diversification. With a diverse portfolio, you have access to several different asset classes, geographies and investment styles, which lessens your risk if one segment of the market suffers heavy losses. Portfolio managers have the expertise to adjust allocations as market conditions change. A Co-operators financial representative is always ready to help if you have questions or would like to review your plan.
Crude supply and inventory data (March 24 to 25)
Oil market data will be closely watched this week, with investors focused on U.S. supply and inventory updates. Weekly industry figures are due Tuesday, followed by government inventory data on Wednesday, which may help clarify how current supply conditions are influencing prices.
More important dates
- April 3: Markets closed for Good Friday
- April 30: 2025 personal income tax filing deadline
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