Futures connected to Canada’s main stock index were higher early Thursday, helped by a rebound in gold that supported miners on the S&P/TSX platform even as the financial sector softened. Liquidity was expected to be limited ahead of the long U.S. Independence Day holiday.
By 06:37 ET (10:37 GMT), the S&P/TSX 60 index standard futures contract had gained 5 points, or 0.2%. The wider S&P/TSX composite index closed higher on Thursday, driven in part by strength among metal mining stocks that offset declines in financial names, although the benchmark remained on track for a weekly loss.
Gold rally bolsters commodities-heavy TSX
Gold advanced strongly on factors that have softened expectations for near-term U.S. interest-rate increases. Softer-than-expected U.S. payrolls earlier in the week and recent comments from the new Federal Reserve chair indicating that inflation risks have eased helped cool the market’s urgency about further hikes.
Spot gold climbed 1.2% to $4,173.53 an ounce by 05:48 ET, while gold futures rose 1.5% to $4,185.75 per ounce. Over the previous week, spot gold was trading up roughly 2%, and the metal was positioned for its first weekly gain in five weeks after tumbling to eight-month lows earlier in the week. The appeal of non-yielding assets such as gold can increase when borrowing costs are perceived to be lower, reducing the opportunity cost of holding bullion.
Oil steadies before the holiday
Oil prices held relatively steady as traders eyed developments in the Middle East and the prospect of subdued trading volumes over the holiday weekend. Brent crude futures, the global benchmark, were up 0.2% at $71.96 a barrel at 05:21 ET, while U.S. West Texas Intermediate crude futures were little changed at $68.66 a barrel.
Market participants have unwound some of the geopolitical risk premium following the signing of an interim Middle East peace deal last month, and expectations for improved Gulf crude flows have supported the view of ample near-term supplies. Negotiations between Washington and Tehran remained in focus: U.S. President Donald Trump said he believed Iran had "agreed to just about everything we need," reflecting optimism about the talks.
At the same time, media reporting indicated Tehran has resisted a proposal to renounce claims over the Strait of Hormuz in return for access to billions of dollars in frozen funds. The report said Washington had offered financial incentives, including access to frozen assets, to secure unrestricted passage through the strategic waterway, but Iran had so far rejected that proposal. Control of the strait - which Tehran effectively closed after the start of a joint U.S.-Israeli assault in late February - has become a central sticking point in negotiations, although reports noted some signs of shipping activity beginning to recover.
U.S. futures mixed; rate path re-pricing continues
U.S. stock futures traded on both sides of flat as markets prepared to be closed on Friday for Independence Day. By 06:58 ET, Dow futures had fallen 64 points, or 0.1%, S&P 500 futures had risen 24 points, or 0.3%, and Nasdaq 100 futures had climbed 330 points, or 1.1%.
In the cash market the main U.S. averages finished mixed in the prior session, with benchmark 10-year U.S. Treasury yields flat and two-year yields edging down. Sentiment during the session was shaped by a Labor Department report showing U.S. job additions in June were softer than expected, while the unemployment rate fell to a one-year low of 4.2%.
Those data, together with remarks earlier in the week from Federal Reserve Chair Kevin Warsh that inflation risks had abated, helped to diminish expectations for an imminent Fed rate hike. According to analysts at Deutsche Bank, market pricing for a July rate increase declined from 34% on Tuesday to 18% by the close of U.S. trading on Thursday.
What this means for markets
Precious metals and commodity-linked equities benefited from a tentative easing in rate-hike expectations and softer U.S. payrolls, while broader equity benchmarks faced mixed pressure from sector-specific movements. Oil markets reacted to evolving geopolitical signals and the potential for improved crude flows from the Gulf. With U.S. markets preparing for a shortened trading week, activity and liquidity were expected to be subdued, which can amplify price moves in either direction.