04:19 PM EDT, 03/27/2026 (MT Newswires) -- The Toronto Stock Exchange turned positive late Friday, with the resources-heavy index boosted by higher commodity prices, while Desjardins sees scope for a further rise in foreign demand in Canadian stocks, even as uncertainty around when the Middle East war might eventually end continues to overshadow trade.

The S&P/TSX Composite Index rallied late to close up 73.14, or 0.2%, to 31,960.65, with both the Energy and Base Metals sectors higher.

Energy was up 2.8% as West Texas Intermediate crude oil rose 5.5% even as U.S. President Trump backed away from a threat to attack Iran's electricity infrastructure, extending a deadline for the country to agree to negotiations for 10 days. WTI oil for May delivery closed up US$5.16 to settle at US$99.64 per barrel, while May Brent oil was last seen up $4.88 to US$112.89.

Base Metals rose 1.5% with gold trading higher, rebounding from a three-month low a day earlier even as the dollar continues to rise as traders turn away from the metal as a safe haven amid the war on Iran. Gold for April delivery was up US$110.00 to US$4,519.00 per ounce after falling to a lowest since Jan. 5 a day earlier.

On the broader market, Desjardins, in a note entitled 'Investment Strategy and Interest Rate Analysis', says equity investors "were well hedged" going into this period of oil shock. "Relative to the sharp moves in energy, equity drawdowns have been limited, paling in comparison to those seen during the "Liberation Day" chaos last year," the bank adds.

With bonds a less reliable hedge in inflationary episodes, many investors sought protection in listed options/volatility markets, according to Desjardins. "Absent a more pronounced equity correction, those hedges will drag on performance as premium costs accrue," it says, and adds: "Investors are still paying up for protection, and for good reason. But many of these listed options expire at the end of March, which could give equities more freedom to move on new information thereafter."

Desjardins says selectivity across regions is rising, noting U.S. equity flows continue to lag equity flows into other jurisdictions. During the first few weeks of the war, investors were rotating out of the U.S. and into Asian and Canadian stocks, it adds.

"Canada still stands out", says Desjardins, in noting fund flows year to date have outpaced anything seen since this data started being collected. At the end of last year, Desjardins notes, foreign investors had begun shifting into Canadian stocks, and it believes that has continued into this year. "Canadian stocks remain under-owned relative to their global market cap, and we see scope for foreign demand to rise further," Desjardins adds.

The Desjardins forecast for the TSX is unchanged, but it has revised its projections for the U.S. and EAFE indices lower. It says higher commodity prices should feed through to higher EPS growth in Canada over time. Desjardins notes while the TSX has underperformed the S&P 500 since the onset of the conflict, nearly all of that underperformance has come from the materials sector, which had an "incredible run" leading up to the conflict. "In a more dangerous and uncertain world, we believe there's room for gold prices to increase again," it adds.

In the U.S., Desjardins notes the S&P 500 now faces more headwinds, with rate cuts potentially off the table, while capex monetization tied to AI also remains a concern. Outside of North America, Desjardins said rising energy costs are likely to blunt earnings growth, and it expects lower returns as a result.