04:24 PM EDT, 04/02/2026 (MT Newswires) -- The Toronto Stock Exchange rose for a third-straight session on Thursday, gaining nearly 1,200 points over the three days as investors bid up stocks instead of spending too much time thinking about the Iran war, even as they brace for its impact on inflation readings.

The S&P/TSX Composite Index closed up 150.27 points, or 0.45%, to 33,108.22, adding to the more than 1,000 points gained over the prior two sessions. According to FactSet going into Thursday the index was year-to-date up 1,245.19 points, or 3.93%.

Most sectors were higher, led for the second straight day by the Battery Metals Index, up near 2.8%, and then Energy, up 2%, as West Texas Intermediate crude oil surged after U.S. President Trump said he expects his war on Iran to last for up to more three weeks, continuing the largest-ever supply shock as the conflict keeps a fifth of global oil exports from the market. WTI crude oil for May delivery closed up US$11.42 to settle at US$111.54 per barrel, the highest since June 2022, while June Brent oil was up US$7.58 to US$108.74.

Base Metals was modestly lower as gold traded lower by midafternoon Thursday, while the dollar rose. Gold for May delivery was last seen down US$113.60 to US$4,699.50 per ounce.

Looking ahead, BMO Capital Markets chief economist Douglas Porter, in his regular weekly column 'Talking Points', notes the wait to see how the events of the last few weeks will impact inflation will not be long. He notes U.S. CPI for March is the headline release for the coming week (due Friday April 10), with the spike in gasoline expected to drive overall prices up 1.0% month over month, which will, in turn, lift the yearly inflation rate a point to 3.4%. The preliminary result from the Euro Area showed a broadly similar move in March, with prices jumping 1.2% m/m, lifting the annual inflation rate six ticks to 2.5%. Porter says Canada's inflation rate will look very similar to Europe, with gasoline prices also rising by a record 21% last month, which could lift CPI by more than 1% in March alone, kicking the annual inflation rate to about 2.6% from 1.8%.

How long inflation stays at this higher level, or rises even further from here, of course all depends on how long oil prices remain elevated, notes Porter. He says with the turn of the calendar to April, BMO has carefully reviewed its scenarios this week, discarding the most optimistic outlook and adjusting the weights on the various potential outcomes. As a result, BMO is lifting its assumption on average WTI prices this year by US$10.00 to US$85.00 per barrel, and by almost as much next year to US$77.50. "To be clear," he adds, "this change was in the works even prior to the latest spike in prices, although that move gave our call one last upward nudge, especially to next year's projection."

Given its estimate that every 10% rise in oil adds about 0.2 percentage points to headline inflation, BMO revised up its call for U.S. and Canadian average inflation this year. Porter says: "Adding a bit of juice is the fact that oil is not the only commodity being heavily affected by the conflict, as fertilizer and aluminum prices have also jumped. Meantime, some product prices, such as diesel and jet fuel, have risen even more steeply than gasoline, in an echo of developments when Russia invaded Ukraine in 2022." BMO is now looking at average U.S. inflation this year of 3.4%, peaking at nearly 4% in the spring, up from 2.5% before the conflict began. BMO is "a bit more contained" on Canada, but even there, the estimate for this year is now above 3% versus 2.4% in the days of yore (five weeks ago).

On the growth front, Porter says the impact on the outlook is "a bit more nuanced". BMO had previously noted the models suggest roughly a one-tick trim in GDP growth for every 10% rise in oil. "But it's not quite that linear," he adds, "smaller moves have little impact (indeed, a modest increase in crude oil prices is arguably even a positive for Canadian growth). But as oil forges higher and global activity becomes more disrupted, as financial markets shudder on inflation concerns, and as consumers are rattled by rising gasoline prices, the hit to growth can deepen more seriously than the mechanical estimates may imply." At this point, Porter says, BMO has only been chipping away at its 2026 GDP growth calls, trimming Canada to 1% and the U.S. to around 2%. "But the axe is poised above those estimates, and it may fall if financial markets and consumer sentiment truly crack in coming weeks," he adds.

Porter says one reason BMO is holding its fire on large revisions on the growth front is that the economies are "mostly holding up well, so far". Echoing the trend seen in the rest of the industrialized world, Porter notes U.S. manufacturing activity actually firmed last month, with the factory ISM rising to a "sturdy" 52.7, the best reading in almost four years.

Consumers, Porter adds, "have not turned tail either" as March auto sales were "solid" at 16.4-million units, or in line with last year's average. He notes the job market "seems to be holding up fine", while noting his column is written a day before payrolls, with ADP reporting 62,000 new private-sector jobs and jobless claims easing to barely above 200,000 last week. As a result, BMO still looks for U.S. GDP growth to hover around 2% in Q1, and dip just a bit below there in the next two quarters. Perhaps reflecting the muted impact on activity so far, the Conference Board found that consumer confidence somehow edged up last month, even amid all the grumbling around US$4.00 gasoline, Porter notes.