Bay Street Likely To Open Weak; Strong Earnings May Help Limit Downside

(RTTNews) - Lower Canadian and U.S. futures amid escalating tensions in the Middle East point to a weak opening for Canadian stocks on Thursday.

The U.S. military shot down four Iranian drones and struck a control center in the southern port city of Bandar Abbas to prevent a fifth drone launch, stoking fears of further disruptions to commercial shipping through the crucial waterway.

Iran's Islamic Revolutionary Guard (IRGC) said that it targeted a U.S. airbase in Kuwait in response to the latest American aerial strike.

Earlier, U.S. President Donald Trump Indicated that negotiations with Iran were still facing major sticking points and warned Oman against attempting to influence control over the Strait of Hormuz.

Hours later, the U.S. Treasury sanctioned the Persian Gulf Strait Authority established to control the Strait of Hormuz, dealing a fresh blow to prospects for a negotiated settlement.

Investors will also be reacting to earnings announcements from major banks.

Royal Bank of Canada reported earnings per share of $3.90 for the second-quarter of the current financial year, compared with C$3.13 a year ago.

Toronto-Dominion Bank reported an EPS of $2.38 for the second quarter, up compared to $1.97 in the year-ago quarter.

Canadian Imperial Bank of Commerce posted earnings per share of $2.54 in the second quarter of its current financial year, compared with $2.05 a year ago.

Among other earnings updates, BRP Inc. reported earnings per share of $1.83 in the first-quarter of its current financial year, compared to $0.47 in the year-ago quarter.

Canadian stocks closed weak on Wednesday, extending the losses from the previous session, as a peace deal between the U.S. and Iran to end the gulf war remained elusive, rendering the mood cautious.

The benchmark S&P/TSX Composite Index ended with a loss of 241.82 points or 0.7% at 34,412.05.

Asian stocks slipped from record highs on Thursday as investors weighed mixed signals from Washington and Tehran about a deal to end the war and reopen the Strait of Hormuz.

The U.S. conducted fresh self-defense strikes in southern Iran and Tehran also targeted strikes on a U.S. air base, driving up global oil prices and reviving inflation concerns.

The major European markets are down in negative territory today amid rising concerns about tensions in the Middle East following fresh strikes by the U.S. on Iranian targets and Tehran's retaliatory attacks.

In commodities trading, West Texas Intermediate Crude oil futures are up $2.07 or 2.3% at $90.75 a barrel.

Gold futures are down 17.90 or 0.4% at $4,430.50 an ounce, while Silver futures are down $1.310 or 1.75% at $73.585 an ounce.