Canadian and U.S. stock markets rallied on Wednesday as oil prices sank amid hopes that the United States and Iran are nearing a deal that would allow ships to deliver crude.

“Some commentary from Trump earlier this morning on prospects that the U.S. and Iran would reach a deal to end the war has really jolted markets … and sent equities higher and oil lower,” said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.

He said there has also been a corresponding effect on interest rates where “some of the inflationary impact of elevated oil prices has been repriced and longer rates which had moved considerably higher in recent weeks have fallen today.”

The conflict in Iran has caused big trouble for the global economy because it has blocked oil tankers from using it to exit the Persian Gulf. A reopening could allow oil to flow freely again and remove upward pressure on inflation that’s driving prices up for all kinds of products worldwide.

The S&P/TSX composite index was up 414.91 points at 33,981.82.

In New York, the Dow Jones industrial average was up 612.34 points at 49,910.59. The S&P 500 index was up 105.90 points at 7,365.12, while the Nasdaq composite was up 512.82 points at 25,838.94. The S&P 500 climbed 1.5 per cent for its best day in nearly a month and hit another all-time high.

The June crude oil contract was down US$7.19 at US$95.08 per barrel.

The price for a barrel of Brent crude oil, the international standard, fell 7.8 per cent to US$101.27, down from more than US$115 early this week. It dropped as President Donald Trump said the Strait of Hormuz could be “open to all” if Iran accepts a reported agreement that the U.S. president did not detail.

Of course, hopes have risen several times already on Wall Street about a possible end to the war with Iran, only to get dashed each time. That could happen again, and oil prices pared some of their steepest losses from Wednesday morning.

Burkett said it is unclear what will happen going forward, but for the moment, markets are viewing the developments positively.

Trump said Tuesday he was pausing his effort to forcefully reopen the Strait of Hormuz to commercial ships. And China’s foreign minister called for a comprehensive ceasefire following a meeting with Iran’s foreign minister. That could be influential because of how closely tied Iran is to China economically and politically.

In the meantime, big U.S. companies continue to turn in much stronger profits for the start of 2026 than analysts expected. That’s supporting the stock market despite all the uncertainties created by the war.

In the Canadian stock market, much of the gains came from the materials sector. The June gold contract was up US$125.80 at US$4,694.30 an ounce.

Burkett said that gold prices have moved more on U.S. inflation expectations compared with the intensity of the war in Iran.

“As far as gold prices, they’re actually a beneficiary in my view of resolution of the conflict in Iran because gold is trading more around the inflationary impact of Trump’s interference with the U.S. Fed, and the oil prices elevated by foreign conflict really constrain Trump’s ability to cut interest rates,” he said.

In the bond market, Treasury yields sank as falling oil prices took pressure off inflation. The yield on the 10-year Treasury dropped to 4.35 per cent from 4.43 per cent late Tuesday.

The Canadian dollar traded for 73.39 cents US compared with 73.44 cents US on Tuesday.

This report by The Canadian Press was first published May 6, 2026.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Daniel Johnson, The Canadian Press