Investing.com – Futures connected to Canada’s main stock index inched lower on Tuesday, as investors assessed the path ahead for Bank of Canada interest rates.
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By 07:00 ET (11:00 GMT), the S&P/TSX 60 index standard futures contract had fallen by 3 points, or 0.2%.
On Monday, the S&P/TSX composite index had finished down by 0.7% at 35,928.63, retreating from its highest closing level in more than week at the end of the previous trading week.
A drop in key financial and metal mining shares dented the index. The declines came as traders increased their bets that the BoC will lift rates at its next meeting later this month.
Spurring these wagers were comments from BoC Governor Tiff Macklem, who flagged risks from persistently elevated inflation in a statement over the weekend. Still, data on Monday showed that Canada’s annual inflation rate increased at a slower than anticipated rate in September.
Nasdaq futures slip
Nasdaq futures edged down. Technology stocks were once again hit by ongoing jitters around the artificial intelligence trade, while investors also geared up for a parade of corporate earnings.
By 07:06 ET, the Nasdaq 100 futures contract had dropped by 179 points, or 0.6%, and S&P 500 futures had slid by 15 points, or 0.2%. Dow futures, meanwhile, gained 33 points, or 0.1%.
The main averages on Wall Street finished around both sides of the flatline in the prior session. The benchmark S&P 500 gained 0.41% and the tech-heavy Nasdaq Composite advanced 1.11%, while the blue-chip Dow Jones Industrial Average edged down by 0.07%.
Tech stocks were among the standout performers, with the Nasdaq notching its best day in two weeks and a tracker of the chip industry breaking an eight-session run of declines. Given the concentration of tech in the broader index, this helped lift the S&P despite a pullback in almost two-thirds of components within the average, analysts at Deutsche Bank said.
AI names, in particular, stabilized after a selloff driven by concerns over debt-driven spending and elevated borrowing costs. However, AI sentiment reversed course once again this morning, dragging down the KOSPI in South Korea and the Nikkei in Japan.
“[A]fter a brief reprieve on Monday from days of aggressive selling, tech is back in the red this morning,” analysts at Vital Knowledge said in a note to clients.
The analysts argued that the AI sector’s latest ructions were linked to a Reuters report that ChatGPT-maker OpenAI is accelerating its fundraising plans to take in more cash prior to rival Anthropic’s potential initial public offering and “in case the IPO market turns less hospitable over the coming months.”
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A fall in shares of data center firm Elice in South Korea following its debut represented another “red flag when it comes to AI companies and their ability to raise money,” the analysts added. Shares of data center-linked industrial name ABB in Europe have also retreated despite a sharp jump in quarterly orders, underscoring the high bar many AI-exposed companies face when posting results.
Beyond AI, shares of GE Aerospace climbed before the opening bell after strong demand fueled better-than-expected third-quarter adjusted revenue. Fellow aerospace player Northrop Grumman advanced as well, buoyed by an increased annual profit forecast.
Shares of car manufacturer General Motors sank premarket on a disappointing adjusted earnings per share forecast, while 3M gained after the Scotch Tape-maker expanded its commercial relationship with e-commerce titan Amazon.
Elon Musk’s SpaceX and streaming giant Netflix are among the headliners in post-market results.
Oil prices rise
Elsewhere, oil prices climbed, leaving benchmark Brent crude futures last exchanging hands above $111 a barrel. U.S. West Texas Intermediate crude futures have also increased by around 5.2% to $109.08 a barrel.
Brent settled within touching distance of a five-month high on Monday, even though it had fallen earlier in the session on reports that the U.S. and Iran may have reached a breakthrough in mediated negotiations.
However, that decline had a short shelf life. Oil prices surged once again after Iran’s First Vice President said the country had “no choice but to exercise sovereignty” over the Strait of Hormuz, exacerbating worries over crude supply disruptions in the critical chokepoint.
“[T]hat added to the sense that a deal before the U.S. midterms in two weeks’ time is going to be challenging, while investors are also concerned that the U.S. administration may be more likely to escalate against Iran after the midterms as Iran’s increased strikes in Hormuz have now slowed the increase in oil flows through Hormuz that had emerged over the previous couple of months,” analysts at Deutsche Bank said in a note.
Recent strikes on vessels near Hormuz have slowed the flow of oil through the waterway. Hormuz has been largely shuttered since after the start of a joint U.S.-Israeli assault on Iran in late February, although reported shipping figures have indicated that supplies have shown signs of recovery.
Gold extends losses
Gold prices dropped, extending losses for a third session, as elevated oil prices fueled inflation concerns and clouded the outlook for U.S. monetary policy ahead of the Federal Reserve’s meeting next week.
Spot gold had fallen by 0.4% to $4,123.15 per ounce by 07:17 ET, while gold futures had ticked down 0.4% to $4,142.20 an ounce. The yellow metal fell 0.6% in the previous session, following a weekly loss.
Investors are assessing the risk that higher energy prices could keep inflation elevated and prompt the Fed to maintain restrictive monetary policy for longer. Gold tends to lose appeal when interest rates rise and increase the opportunity cost of holding non-yielding assets.
Original Article
TSX futures inch down as traders eye Bank of Canada rate path
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