Canadian Stocks Edge Lower Amid Ongoing Gulf War, U.S. Inflation Data

(RTTNews) - Canadian stocks slid on Wednesday as investors parsed U.S. consumer price data against the backdrop of unrelenting inflationary pressures due to escalating oil prices as a result of the Middle East conflict.

After opening below yesterday's close, today the benchmark S&P/TSX Composite Index gained momentum until early noon but then gave ground to trade negative through the remaining session before settling at 33,119.83, down by 150.82 points (or 0.45%).

Three of the 11 sectors posted gains today, with the energy sector leading the pack.

Today in the U.S., the Labor Department's Consumer Price Index report for February showed subdued numbers.

According to the data, the core consumer prices (i.e., excluding food and energy) rose by 0.2% from the previous month. The year-on-year core consumer inflation rate stood at 2.5% in February, unchanged from January.

The headline consumer price index rose by 0.3% in February with a sharp price rise seen in fuel and gasoline, which lifted aggregate energy costs by 0.6%.

Year-on-year inflation stood steady at 2.4% for February, unchanged from January.

However, economists shifted focus away from the February report as they await next month's figures that would reveal the cascading effect of the current Middle East conflict on the U.S. economy.

Due to the oil and energy shocks, inflation is expected to increase in March. Since the start of the war on February 28, fuel prices have jumped more than 20% in the U.S.

Global market participants speculate that uncertainty over the Iran war would prevent the Fed from making big moves. If the war turns more vigorous, leading to a further increase in oil prices, (pushing up inflation), analysts speculate that the Fed may consider raising rates.

On Monday, U.S. President Donald Trump stated that the war would end very soon, which briefly pulled back soaring oil prices.

However, the escalation heated up after CNN reported that Iran could be laying naval mines in the critical Strait of Hormuz waterway.

Furious Trump warned Iran that it would be hit "at a level never seen before" if it does not remove those mines.

Brushing aside Trump's threat, Iran's Islamic Revolutionary Guards Corp stated that it would not allow even "one liter of oil" to pass through the narrow seaway unless the joint strikes on Iran ceases fully.

Today, in a telephonic interview with Axios, Trump once again claimed that the conflict will end anytime he wants it to end and boasted that there is "practically nothing left to target."

Earlier, Israel's Defence Minister Israel Katz had announced that the joint operation would continue as long as it is necessary.

Conflicting signals about the extension of war weighed down on the index today.

In Canada, Lori Idlout, a member of the New Democrats Party in the parliament, defected to join the Liberal Party, thereby pushing Prime Minister Mark Carney closer to a majority in the House of Commons.

Major sectors that gained in today's trading were Energy (2.60%), Healthcare (1.18%), and Utilities (0.25%).

Among the individual stocks, Parex Resources Inc (6.34%), Cenovus Energy Inc (4.58%), Strathcona Resources Ltd (4.57%), and Brookfield Infra Partners (2.25%) were the prominent gainers.

Major sectors that lost in today's trading were IT (2.87%), Consumer Staples (1.49%), Communication Services (1.22%), and Materials (1.04%).

Among the individual stocks, Constellation Software Inc (8.12%), Open Text Corporation (3.32%), Premium Brands Holdings Corporation (2.24%), and BCE Inc (1.92%) were the notable losers.

Secure Waster Infrastructure Corp (6.89%) and Methanex Corp (6.00%) were among the prime market-moving stocks today.