Equities
Global markets were mixed as fresh fighting between the U.S. and Iran pushed oil prices higher and markets ramped up bets on a rate hike after hawkish remarks from Federal Reserve Chair Kevin Warsh.
Wall Street futures were in the red after major North American markets closed lower on Friday.
TSX futures were pointing higher as oil prices climbed.
Markets reacted by lifting the probability of a September Fed rate increase to 57%, sending short-term Treasury yields sharply higher and flattening the yield curve.
“We continue to expect that a [U.S. Fed] hike won’t come until December, though agree that the September meeting is live,” said Michael Feroli, chief U.S. economist at JPMorgan.
“Moreover, regardless of the exact timing of hikes, Warsh’s speech suggested a chair more willing to translate his concern about inflation into a policy tightening.”
Overseas, the pan-European STOXX 600 was down 0.02 per cent. Germany’s DAX declined 0.63 per cent, France’s CAC 40 gained 0.22 per cent and markets in Britain were closed.
In Asia, Japan’s Nikkei closed 0.14 per cent lower, while Hong Kong’s Hang Seng edged down 0.07 per cent.
Commodities
Oil prices rose after the U.S. attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran, as their conflict extended into its sixth month.
Brent crude futures climbed 2.7 per cent to US$90.50 a barrel, while West Texas Intermediate (WTI) crude traded at US$85.75, up 2.5 per cent.
“We see more chances of contained confrontation rather than any sustained escalation in the conflict. What continues to be impacted with every flare up are the timelines for Hormuz ‘reopening’,” said Suvro Sarkar, head of energy research at DBS.
In other commodities, spot gold was little changed at US$4,455.19 an ounce. U.S. gold futures declined 0.5 per cent to US$4,506.60.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 71.86 US cents to 72.06 US cents in early trading. The Canadian dollar was up about 1.18 per cent against the greenback over the past month. It traded at $1.3883 per US$1.
The U.S. dollar index, which weighs the greenback against a group of currencies, slid 0.14 per cent to 99.56.
The euro rose 0.12 per cent to US$1.1600. The British pound advanced 0.04 per cent to US$1.3543.
In bonds, the yield on the U.S. 10-year note was last up at 4.749 per cent.
Economic news
China’s PMI
Japan’s retail sales and industrial production
Germany CPI and retail sales
With Reuters and The Canadian Press