Investing.com -- Canada’s main stock index retreated on Thursday morning as investors weighed a fragile ceasefire agreement against renewed volatility in energy markets. By 10:28 ET, the S&P/TSX Composite index had shed 150.94 points, or 0.45%, while the S&P/TSX 60 index fell 8.66 points to 1,944.53.

The decline followed a stellar session on Wednesday that saw markets rally on news of a diplomatic breakthrough between Washington and Tehran. However, signs of strain in the two-week agreement have dampened the initial optimism and spurred a cautious reassessment of risk.

Oil Prices Rebound Amid Strait Uncertainty

Crude prices climbed on Thursday after suffering their steepest one-day drop since April 2020 in the previous session. Crude Oil WTI Futures rose 7.86% to $101.83 a barrel, while Brent Oil Futures moved back toward the $100 threshold.

Market participants remain focused on the Strait of Hormuz, where traffic remains disrupted despite the tentative pause in hostilities. Reports that Iran has halted tanker passage in response to ongoing regional strikes have kept supply concerns at the forefront of trading.

Inflation Data Adds to Market Pressure

While Middle Eastern developments dominated headlines, a fresh batch of U.S. economic data provided a sobering reminder of domestic pressures. The February personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose 3% on an annual basis.

The reading remained significantly above the central bank’s 2% target, suggesting that price pressures were entrenched even before the recent oil shock. Investors are now looking ahead to Friday’s consumer price index (CPI) report for a clearer picture of March’s inflationary trajectory.

Ceasefire Doubts Grow in Middle East

The diplomatic situation remains fluid as Tehran alleges violations of the 10-point peace proposal brokered earlier this week. Disagreements over the inclusion of Lebanon in the deal have emerged as a primary point of contention between the parties.

Despite the friction, Iranian negotiators are expected in Islamabad for talks scheduled for Saturday morning. U.S. President Donald Trump has maintained that U.S. military forces will remain positioned around Iran until a more permanent agreement is reached.

Gold Holds Gains on Safe-Haven Demand

Gold prices continued to advance on Thursday as the heightened geopolitical uncertainty drove investors toward traditional safe-haven assets. XAU/USD was up nearly $50 at $4,768.47 per ounce by mid-morning.

The yellow metal had previously struggled as rising oil prices fueled expectations of "higher-for-longer" interest rates from the Fed. The current shift reflects a pivot back toward hedging against potential escalations in the Middle East conflict.