Markets in Toronto and New York retreated on Friday as rising global oil prices and fears of higher inflation shook the global bond market.
“Rising bond yields from Japan to North America were one of the major headwinds for equity markets around the globe,” said Kathrin Forrest, equity investment director at Capital Group.
Some of the upward pressure also came from rising inflation worries as transportation bottlenecks continue to disrupt supply chains amid the ongoing war in Iran, she added.
Forrest said Canada’s main stock was primarily weighed down by the materials sector, coming from weaker precious metals.
The S&P/TSX composite index was down 434.92 points at 33,833.35.
In New York, the Dow Jones industrial average was down 537.29 points at 49,526.17. The S&P 500 index was down 92.74 points at 7,408.50, while the Nasdaq composite was down 410.08 points at 26,225.14.
Technology stocks dragged the U.S. market lower, particularly AI companies. They had shot so high that some critics said they had gone too far.
The July crude oil contract was up US$4.10 at US$101.02 per barrel.
The Strait of Hormuz remains shut to oil tankers, preventing them from delivering crude to countries worldwide. That’s pushing oil prices higher and feeding into fears of higher inflation.
The worries were most clear in the bond market, where U.S. Treasury yields climbed. The 30-year U.S. Treasury yield is back to where it was in 2007.
Higher yields can make mortgages and other kinds of loans more expensive, which slows the economy. They also tend to push downward on stocks and other investments.
“The upward pressure on yields that we’re seeing, given worries about perhaps inflation higher for longer, that reprises expectations for central bank policy,” Forrest said.
That would, in turn, put upward pressure on the U.S. dollar while lowering commodity prices, including gold, she said.
The Bank of Canada will be closely watching April’s inflation data on Tuesday, which economists estimate may top three per cent for the first time since 2023 as the full impact of higher energy prices is reflected in Statistics Canada’s consumer price index.
While headline inflation is expected to jump higher, Forrest said it’s important to look at core inflation measures, which have so far remained relatively anchored.
“The Bank of Canada will be very focused on those,” she said.
The central bank indicated in its policy decision last month that it will be flexible on its policy stance.
“It may initially look through inflation that is transitory, but if it believes that inflation will become more persistent, we might expect to see some upward pressure on rate expectations for the Bank of Canada,” Forrest said.
The Canadian dollar traded for 72.72 cents US compared with 72.86 cents US on Thursday.
The June gold contract was down US$123.40 at US$4,561.90 an ounce.
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Ritika Dubey, The Canadian Press.
This report by The Canadian Press was first published May 15, 2026.
