Equities
Stocks fell as investors worried about the U.S. fiscal outlook and the lack of progress on trade talks.
Wall Street futures pointed to a lower open.
TSX futures were also in the red.
In Canada, investors are getting results from Canada Goose Holdings Inc.
On Wall Street, markets are watching earnings from retailers TJX Companies Inc, Lowe’s Companies Inc. and Target Corp.; technology companies Zoom Video Communications Inc. and Snowflake Inc.; and Medtronic PLC.
Investor sentiment has been fragile since Moody’s last week downgraded the United States’ credit rating, stoking worries about the country’s debt pile with U.S. President Donald Trump pushing for tax cuts that could worsen the debt load by $3-trillion.
There are also trade concerns, with U.S. trading partners pressing Washington to ease or eliminate its tariffs.
“(We’re seeing) the American exceptionalism narrative unwind, so you have a natural process of something weakening after years of concentration,” said David Russell, global head of market strategy at TradeStation.
“We’re kind of pouring gasoline on the fire with tariffs and all of this budgetary uncertainty.”
Markets are also monitoring the G7 finance ministers’ meeting in Alberta.
Overseas, the pan-European STOXX 600 was down 0.27 per cent in afternoon trading. Britain’s FTSE 100 was flat, Germany’s DAX lost 0.26 per cent and France’s CAC 40 was down 0.58 per cent.
In Asia, Japan’s Nikkei closed 72.04 per cent lower, while Hong Kong’s Hang Seng gained 0.62 per cent.
Commodities
Oil prices rose more than 1 per cent on fears of potential supply disruption following a report of possible escalation in the Middle East.
Brent futures rose 79 US cents to US$66.17 a barrel. West Texas Intermediate crude jumped 82 US cents to US$62.85.
Prices were up on an unconfirmed report by CNN that Israel may be preparing to strike Iranian nuclear facilities, citing unnamed U.S. officials.
“No confirmation, but in this game, denials are noise—price moves on the mere scent of escalation," said Stephen Innes, managing partner at SPI Asset Management.
In other commodities, spot gold was up 0.8 per cent to US$3,314.48 an ounce. Gold prices rose to their highest in more than a week, supported by the weaker dollar and safe-haven demand over U.S. fiscal policy fears.
“This fiscal concern is weighing on the dollar, and the weaker dollar is supporting gold prices,” UBS analyst Giovanni Staunovo said.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 71.82 US cents to 72.12 US cents in early trading. The Canadian dollar was up about 0.09 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, lost about 0.51 per cent to 99.61.
The U.S. dollar extended its two-day slide after President Trump failed to convince Republican lawmakers to back his sweeping tax bill.
The dollar has been under pressure from persistent worries about Trump’s trade war, as well as concerns over the tax bill and G7 finance ministers talks. At the same time, U.S. Treasury yields have been rising, as the “sell America” theme continues to inform investment decisions.
In bonds, the yield on the U.S. 10-year note was last up at 4.541 per cent ahead of the North American opening bell.
Dollar selling accelerated in Asia, driving the Japanese yen, Swiss franc and the euro to their strongest levels in two weeks.
“People are looking at the idea of moving capital out of the U.S. and it’s certainly not a mass exodus, but people are looking at the opportunities in some of these other markets again,” said Chris Weston, head of research at Pepperstone.
The euro gained 0.43 per cent to US$1.1332. The British pound gained 0.14 per cent to US$1.3412.
Investors in the Japanese bond market remained jittery after a steep selloff in super-long bonds in the previous session.
Economic news
Japan trade balance
U.K. CPI
(8:30 a.m. ET) Canada’s new housing price index for April. Estimate are flat month-over-month and up 0.1 per cent year-over-year.
With Reuters and The Canadian Press