The stock market has a track record of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. On March 16, 2026, the S&P/TSX Composite Index rose around 0.5%, surpassing the 32,700 mark, closing at 32,876.65, an increase of 334.72 points.
This rise comes despite a 1.6% decline for the trading week ending March 16, indicating a complex market environment. The index is now 3.0% higher for the year 2026, reflecting a potential recovery trend.
February’s inflation reading was reported at 1.8% year-over-year, which is half a percentage point lower than January’s figures. This decline in inflation may have contributed to the recent uptick in the index, as noted by analysts.
Brianne Gardner, a market analyst, commented on the situation, stating, “It could be a potential bounce that we are likely seeing, but we have seen markets are continuing to remain driven by those geopolitical headlines.” She further elaborated that the index’s performance was aided by lower energy costs and the fading impact of last year’s temporary tax break.
Gardner also pointed out that tech stocks, which had previously sold off during geopolitical volatility, often rebound first when markets stabilize. This suggests a potential for recovery in higher beta sectors such as technology.
However, concerns remain regarding the geopolitical landscape. The worry in financial markets is that if the Strait remains closed for a long time, it could keep enough oil off the market to drive inflation up to a debilitating level for the global economy.
Currently, the Relative Strength Index (RSI) of the S&P/TSX Composite Index stands at 40, indicating a neutral range. Notably, there are 15 stocks within the index that have RSIs below the buy signal of 30, suggesting potential for a short-term rebound.
Canadian Natural Resources Ltd. has been identified as the most overbought company in the index, which may influence investor sentiment moving forward.
As the market continues to navigate these challenges, observers will be watching closely for further developments, particularly in relation to inflation and geopolitical stability.
