04:27 PM EDT, 03/12/2026 (MT Newswires) -- The Toronto Stock Exchange was down for a second-straight day Thursday, as investors turned cautious amid uncertainty over how long the Middle East war will go on.

The S&P/TSX Composite Index lost another 279.23 points, or 0.8%, to 32,840.60, adding to the near 150 points fall of yesterday..

Still today's losses in Canada were about half of those recorded on both the S&P 500 and Nasdaq Composite indices in the United States. That is likely down to gains in Energy, while there is talk of Canada's natural resources becoming "ever more appealing" to its allies given circumstances around the Gulf turmoil and domestic trade data was seen to show sectoral tariffs imposed by the United States are "by far the most impactful for Canada, and have not been impacted by recent changes".

Most sectors were lower, led by Base Metals down 2.8% as gold traded lower Thursday while the dollar continues to rise because the U.S.-Israel war on Iran is disrupting markets. Gold for April delivery was last seen down US$82.60 to US$5,096.50 per ounce. Industrials and Health Care were also both down at least 2%.

But Energy was up 2.1% as West Texas Intermediate (WTI) oil surged again Thursday with traders shrugging at the largest-ever release of strategic reserves by International Energy Agency (IEA) members while Iran stepped up attacks on tankers trapped in the Persian Gulf with the United States unable to secure shipping through the Strait of Hormuz in the second week of its war on Iran. WTI crude oil for April delivery closed up US$8.48 to settle at US$95.73 per barrel, while May Brent crude was up US$7.15 to US$99.13 after earlier touching US$101.59.

National Bank published a note looking at 'The Iran Conflict: Scenarios and Geopolitical Impact'. The bank concluded the most likely outcome is that the regime there survives in exchange for strategic concessions. However, it noted, this carries the risk of long-term instability and repeated U.S. military intervention. The conflict also reinforces the global focus on supply-chain security, it said, before adding: "If the region remains unstable over the long term, this could weaken the United States' geopolitical standing and make it harder to form alliances in other areas."

National Bank went on to say in this environment Canada's natural resources and its distance from major geopolitical flashpoints become "ever more appealing" to its allies. These considerations, together with U.S. concerns about higher costs, could facilitate a deal in the upcoming trade talks between Canada, the United States and Mexico, particularly in key sectors such as aluminum, steel, and fertilizer production, the bank added.

Still on the subject of trade, data released earlier today showed Canada's trade deficit widened to $3.6 billion in January on export weakness. But within the overall data were some signs that Canada may not be as badly off in its trade relations with the U.S. as some might have feared.

Breaking today's trade data down, Scotiabank noted the share of Canadian exports bound for the U.S. is gradually trending lower, averaging 76% in 2024 and 72% in 2025, and coming in at 68% in January 2026. The bank noted this has been driven by a decline in exports to the United States and increasing exports to other regions, mainly Europe. In January, exports to the U.S. fell 3.8% m/m and were down 13.7% compared to 2024. Exports to other countries fell 6.5% m/m but were 28% higher than 2024. "Though," Scotiabank said, "much of this has been driven by elevated overseas exports of gold." The bank noted a similar dynamic is playing out on the import side, as the share of Canadian imports from the U.S. is down to 56% from 62% in 2024.

According to Scotiabank, Canada continues to benefit from a "relatively" low effective tariff rate on total exports, at 3.1%, the bank's latest estimate, based on pre-tariff trade flows, of the increase in tariffs since end-2024. The low rate is thanks to most of Canada's trade with the U.S. continuing on a tariff-free basis under CUSMA. Scotiabank noted this is down from 4.5% last month due to the country-specific U.S. IEEPA tariffs being replaced by a 10% global tariff, while it also noted the reported average actual duties paid on U.S. goods imports from Canada was 3.1% for the second month in a row, down from close to 4% six months ago. "This should continue to trend lower through February and March," Scotiabank said, while noting the proportion of Canadian goods imported into the U.S. facing tariffs has settled around 10%.

Scotiabank said the U.S. trade deficit is back close to its pre-tariff level. It noted U.S. trade saw significant volatility early in 2025 in response to the tariffs, before stabilizing later in the year. In January, U.S. exports rose 5.5% and imports fell 0.7%, resulting in a decline in the trade deficit to US$55 billion, down from around US$70 billion in 2024.

In conclusion, Scotiabank noted tariffs and uncertainty continue despite the U.S. Supreme Court ruling. While the U.S. IEEPA tariffs were struck down last month, a new temporary global tariff of 10% was immediately implemented to replace them, with a promised lift to 15%, and work is underway to design the longer-term replacements, which could be higher. "The new global tariff is lower than the 35% tariff on non-CUSMA-compliant goods that Canada previously faced, though the vast majority of our trade has been compliant and thus exempt from those tariffs. The sectoral tariffs are by far the most impactful for Canada, and have not been impacted by recent changes," the bank added.