Equities
Global markets slid as oil prices surged and Treasury yields hovered near multiyear highs, stoking inflation worries ahead of an earnings season that will test whether corporate profits can sustain the momentum.
Wall Street futures followed sentiment lower after U.S. markets closed down yesterday.
TSX futures were in the red after Canada’s main stock market yesterday posted its steepest decline in four months.
In Canada, investors are getting results from Aritzia Inc., NovaGold Resources Inc. and Tilray Brands Inc.
On Wall Street, markets are watching earnings from Pepsico Inc.
Broadcom was looking for US$50-billion in financing, while SpaceX was planning to issue US$30-billion in investment-grade debt and raise US$10-billion in loans to buy chips from Nvidia, which is a major shareholder in SpaceX.
Nigel Green, CEO of deVere Group, warned of a dangerous loop where Nvidia was bankrolling the very customers who buy its products, leaving global investors at risk if the expected profits failed to materialize.
“The AI build-out started on cash,” said Green. “It’s increasingly running on credit, and credit changes the risk profile entirely.”
“Debt has to be repaid on schedule, whether the revenues show up or not,” he added. “And this debt is landing in the bond funds and pension pots of savers right around the world.”
Overseas, the pan-European STOXX 600 was down 0.55 per cent. Britain’s FTSE 100 edged up 0.03 per cent, Germany’s DAX dropped 0.78 per cent and France’s CAC 40 gave back 0.4 per cent.
In Asia, Japan’s Nikkei closed 1.42 per cent lower, while Hong Kong’s Hang Seng declined 1.43 per cent.
Commodities
Oil prices rose on persistent worries about supply from the key Middle East producing region amid an increase in attacks on shipping in the Persian Gulf and the Strait of Hormuz, while the U.S. cut output as a hurricane weighed on offshore production.
Brent crude futures gained 4.67 per cent to US$104.90 a barrel. West Texas Intermediate (WTI) crude futures climbed 4.73 per cent to US$92.46.
“The frequency of Iranian attacks on ships is now at the highest point since the war began, and likely to intensify further,” said Saul Kavonic, MST Marquee head of energy.
He noted that “constrained product flows, extreme logistics costs and high likelihood of Iranian escalation are keeping prices elevated.”
In other commodities, spot gold rose 0.3 per cent to US$4,122.99 an ounce. U.S. gold futures added 0.18 per cent to trade at US$4,147.90.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 70.03 US cents to 70.21 US cents in early trading. The Canadian dollar was down about 3.04 per cent against the greenback over the past month. It traded at $1.4266 per US$1.
The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.12 per cent to 102.36.
The euro slid 0.12 per cent to US$1.1185. The British pound fell 0.11 per cent to US$1.3199.
In bonds, the yield on the U.S. 10-year note was last up at 5.323 per cent.
Economic news
8:30 a.m. ET: U.S. initial jobless claims for week of Oct. 3, which slipped 2,000 to a seasonally adjusted 197,000, compared with forecasts of 200,000.
10 a.m. ET: U.S. wholesale trade sales for August.
With Reuters and The Canadian Press