Canadian equities moved lower on Wednesday while U.S. markets delivered mixed performance as investors reacted to escalating concerns surrounding the conflict in the Middle East and another sharp rise in oil prices.

The S&P/TSX Composite Index declined by more than 260 points as higher energy costs and geopolitical uncertainty continued pressuring investor sentiment. In the United States, the Dow Jones Industrial Average finished lower, while the Nasdaq Composite managed modest gains supported by strength in large technology companies.

Oil prices surged after negotiations aimed at easing tensions involving Iran appeared to stall. Traders remained focused on disruptions affecting the Strait of Hormuz, a key global shipping route for crude oil exports. U.S. crude futures climbed above $106 per barrel, while Brent crude prices also posted strong gains.

Market observers noted that ongoing restrictions affecting Iranian oil exports, combined with shipping disruptions in the region, are increasing concerns about global energy supply and inflation risks.

Despite the geopolitical uncertainty, several major technology companies reported stronger-than-expected quarterly earnings. Amazon and Meta both released results that exceeded analyst expectations, supported by growth in cloud computing, advertising, and digital services.

Meanwhile, both the Bank of Canada and the Federal Reserve left interest rates unchanged during their latest policy meetings. Policymakers highlighted continued uncertainty tied to energy markets, inflation, and international trade conditions.

Bank of Canada officials also pointed to upcoming reviews of the Canada-U.S.-Mexico trade agreement as another factor that could influence future economic growth and monetary policy decisions.

Analysts say the combination of elevated oil prices, geopolitical instability, and uncertain interest rate direction is creating a more cautious environment for investors. Some portfolio managers have shifted toward defensive positioning, including inflation-linked assets and reduced exposure to economically sensitive sectors.

The Canadian dollar remained relatively stable against the U.S. dollar during the session, while gold prices moved lower despite the broader geopolitical backdrop. BNN Bloomberg