Futures related to Canada’s main equity index moved higher on Wednesday as investors absorbed two central themes: growing optimism that a Middle East accord might ease energy supply risks, and encouraging revenue guidance from e-commerce platform Shopify that suggested its investments in artificial intelligence are resonating with merchants.
By 07:56 ET (11:56 GMT), the S&P/TSX 60 index standard futures contract had advanced by 33 points, representing a 1.6% gain. Market participants flagged Shopify’s better-than-anticipated projection for current-quarter revenue as a key positive for sentiment, seeing the guidance as an early sign that the company’s sizeable focus on AI is beginning to draw more merchants to its commerce offerings.
Market breadth and sector drivers
Tuesday’s session left Canada’s equity averages on firmer footing, with a fresh record reached for the average amid gains in technology and metal mining stocks. The technology sector in Canada outperformed markedly, rising 7.1% over the session, a move led by a strong performance in shares of electronic equipment supplier Celestica. Metal mining names also contributed to the lift in the benchmark.
At the same time, oil prices eased on expectations that a possible deal between the U.S. and Iran could reopen critical shipping lanes, reducing some near-term supply concerns. That reprieve in oil helped to cool inflationary anxieties for some investors and prompted a recalibration of anticipated central bank rate trajectories. As rate expectations shifted lower, bullion, which benefits from lower real yields, strengthened.
Commodities and rates - oil and gold
Crude oil was trading slightly higher on reports of targeted attacks by Iran-aligned Houthi militants in Yemen on Saudi vessels in the Red Sea, but prices have moved down sharply over the week as hopes for a negotiated reopening of the Strait of Hormuz increased. That waterway was a major conduit for oil and liquefied natural gas prior to the onset of the conflict referenced in recent headlines, and market pricing has reflected the potential for restored supply flows.
Gold registered meaningful gains, touching a one-month high. At 08:23 ET, spot gold had risen 3.3% to $4,211.20 an ounce, while gold futures increased 2.9% to $4,270.80. The metal’s advance was tied in part to traders dialing back expectations for additional Fed tightening; market pricing moved to reflect only one U.S. rate increase by year-end, compared with two hikes that had been expected as recently as the prior week. A softer U.S. dollar also supported dollar-priced bullion by improving its attractiveness for overseas buyers.
U.S. futures and Wall Street context
U.S. stock index futures were broadly higher in early trading, though not without crosscurrents from corporate results in the technology sector. By 05:49 ET (09:49 GMT), Dow futures were up 142 points, or 0.3%, S&P 500 futures had climbed 23 points, or 0.3%, and Nasdaq 100 futures were largely flat.
On Tuesday, the main U.S. indices posted significant gains as technology names staged a recovery after a difficult July. The S&P 500 and Dow closed higher by roughly 1.7% to 1.8%, each finishing at record levels. The Nasdaq Composite rose 2.6% to a one-and-a-half month high.
Risk appetite received a boost from comments by several U.S. officials, including an assertion by the U.S. president that a deal to reopen the Strait of Hormuz was near. Reporting indicated that an announcement involving the U.S., Oman, and Iran might come as soon as Wednesday, though media in Iran suggested Tehran perceived the possibility of delays due to continued U.S. pressure. The mixed signals kept some uncertainty in markets despite the hopeful tone.
Corporate earnings and tech reactions
Earnings delivered a more nuanced picture. Shopify’s forward-looking revenue guidance for the current quarter outperformed expectations and was interpreted by investors as confirmation that the company’s investment in AI is helping to attract and retain merchants on its platform. That outlook helped underpin gains in Canadian technology-linked instruments and contributed to an upbeat risk tone in Canada’s markets.
Conversely, the premarket reaction to the first quarterly report from SpaceX as a listed company was negative. Shares of the rocket maker fell 10% before the open even though the firm reported revenue that beat forecasts and narrowed its quarterly loss. Analysts pointed to heightened spending on artificial intelligence infrastructure as the primary pressure on free cash flow. Leadership commentary accompanying the results was ambitious - noting a long-term revenue target and a timetable for novel initiatives - but the market focused on the near-term cash flow impact of elevated capital outlays.
Advanced Micro Devices also saw a pullback in premarket trading, with shares down over 8%. The fall followed comments from SpaceX leadership indicating the company would no longer buy processors from AMD and would instead adopt an exclusive build on a rival’s AI server architecture. That development weighed on AMD shares despite the chipmaker reporting strong quarterly sales. For the quarter ended June 27, AMD posted $11.5 billion in revenue, a figure that was slightly above consensus expectations.
What this means for markets
The confluence of easing energy fears, a swing in rate expectations, and mixed corporate earnings has created a market environment where risk assets can rally but remain sensitive to headline developments. In Canada, the combination of Shopify’s guidance and sector-specific strength pushed futures higher, while in the U.S. broader indices benefited from a rebound in technology even as individual companies’ results and supply-chain or vendor decisions produced notable intraday moves.
Investors appear to be balancing an improving geopolitical outlook with the reality that some technology firms are expanding capex on AI initiatives, a trend that can support long-term growth but pressure near-term free cash flow. Commodities, particularly oil and gold, are reflecting that dynamic through price moves that feed back into rate expectations and risk appetite.
Bottom line
Futures on Canada’s main index moved higher on the back of improved revenue guidance from Shopify and broader hopes for a Middle East agreement. Commodity markets and U.S. corporate earnings added mixed signals, creating a market backdrop where gains are present but subject to rapid reassessment as new developments emerge.