TSX drops nearly 4% amid inflation fears fueled by Middle East conflict

Canada's main index of stocks fell on Tuesday, as the Middle East conflict entered its 4th day. This was due to sector-wide losses.

As of 10:24 a.m., the S&P/TSX Composite Index was down 3.97%, at 33,173.05 point. The S&P/TSX composite index was down 3.97% at 33,173.05 points as of 10:24 a.m. ET and appeared to be on track for its biggest single-day decline since April 2025 when U.S. president Donald Trump announced reciprocal duties.

The global gold index, which includes metal mining companies, suffered the largest losses in the sector.

After the bell on Monday, Capstone Copper and Majestic Gold & Silver both fell more than 13 percent each. Capstone Gold & Silver also dropped 13.3 percent after it reported a?quarterly loss below expectations.

As the U.S. Dollar strengthened in response to the escalation of the Middle East conflict, spot gold dropped by more than 4 percent. Silver fell by more than 9 percent.

Middle?East Analysts fear that the air attacks by Iran on U.S.-allied Gulf States could escalate the war against Iran.

Oil prices are up more than 16 percent this week, and gas prices are also on the rise. Investors worry about inflation because the U.S./Israeli war against Iran has halted Middle East energy exports.

The energy stocks dropped?0.5%.

Bond markets around the world have also fallen sharply, prompting traders to reduce their bets on rate cuts from the U.S. Fed Reserve and other central banks.

"Central banks need to see more than a temporary blip in energy prices as a result the conflict," said Shiraz Ahmed, founder of Sartorial Wealth.

"If we see a longer-term rise in inflation or a shrinkage of the GDP, this will be a major impetus to?central banks?act."

The consumer discretionary and industrials sectors, as well as the heaviest weighted financials, each fell by nearly 2.5%, while the tech stocks dropped 2.7%.

Paramount Resources, a company that specializes in energy production, gained 5% on the back of better-than expected fourth-quarter revenues.

(source: Reuters)