Market snapshot
Futures tied to Canada's primary stock index were trading lower on Wednesday, pressured by a renewed pullback in artificial intelligence-linked equities and the ongoing military tensions in the Middle East. By 07:58 ET (11:58 GMT), the S&P/TSX 60 index standard futures contract had lost 15 points, a decline of 0.8%.
The broader S&P/TSX composite index closed down on Tuesday after technology and resource names retreated, leaving investors cautious as a fresh round of policy and economic data approaches.
Central bank focus
Attention has turned to the Bank of Canada (BoC), which the market expects will hold its overnight interest rate steady in its policy decision later in the day. According to LSEG data cited by Reuters, traders have priced in somewhat more than one rate increase before the end of 2026, signaling modest further tightening priced into markets beyond the forthcoming pause.
U.S. futures and technology pressure
U.S. futures extended losses on Wednesday morning. By 07:54 ET (11:54 GMT), Dow futures were down 411 points, or 0.8%, S&P 500 futures had slipped 70 points, or 1.0%, and Nasdaq 100 futures were lower by 444 points, or 1.5%.
Equity benchmarks on Wall Street were mixed in the prior session, with the technology sector resuming a broader sell-off after a short pause earlier in the week. The Philadelphia semiconductor index, which tracks chipmakers, fell 1.9%.
Major semiconductor companies that finished Tuesday in negative territory - including Nvidia, Micron, Intel, and Qualcomm - were pointing lower in premarket U.S. trade. Software earnings from Oracle, scheduled after the closing bell on Wall Street, are seen as a potential stress test for investor enthusiasm around AI-related businesses.
Analysts have highlighted sustained concerns about the artificial intelligence investment theme, particularly following disappointing quarterly results from chipmaker Broadcom last week. An equity capital raise by Google has added to caution among traders, who are beginning to question whether companies - including very large tech firms - can finance the surge in data center construction required to support advanced AI models.
In a market commentary, analysts at Vital Knowledge emphasised the dominance of the technology pullback in driving index performance, stating that, for the S&P 500, attention to Iran is secondary - far more important is the ongoing damage in technology stocks as the sector extends losses from Friday.
Geopolitical backdrop
The joint U.S.-Israeli campaign against Iran, now in its fourth month, remains an undercurrent for markets. U.S. President Donald Trump warned on Wednesday that Iran has taken too long to negotiate a peace deal and "will have to pay the price." In a social media post, he claimed that Iran’s military has been eradicated by the joint campaign, adding that the "Bully of the Middle East is DEAD!!!"
Media reports from Fox News indicated that the president is close to ordering new strikes on Iranian infrastructure such as power plants and bridges. The U.S. previously struck targets in Iran in retaliation for an attack on an American helicopter near the Strait of Hormuz that Washington attributed to Tehran. Iran has not formally taken responsibility for the helicopter downing.
Iran has launched attacks on U.S. bases in Kuwait and Bahrain, and five missiles were said to have been shot down in Jordan, according to the Associated Press. Concurrently, Israel has continued strikes in southern Lebanon targeting Iran-backed Hezbollah militants.
There were brief hopes for a cease-fire earlier in the week after Iran and Israel reportedly agreed to halt strikes following demands from President Trump. The president indicated that a deal was close and said the U.S. was only weeks away from declaring victory over Iran.
Energy markets and shipping
Brent crude futures moved higher amid the deteriorating security environment. Oil prices remain well above pre-war levels, and the Strait of Hormuz - a critical transit route for roughly one-fifth of global oil shipments - is described as all but closed to tanker traffic, exacerbating concerns about supply disruptions.
Inflation data in focus
Markets are closely watching U.S. consumer price index (CPI) data due on Wednesday, with the potential for energy-driven inflation to prompt a reassessment of global central bank paths. A stronger-than-expected inflation reading could strengthen bets that the Federal Reserve might raise rates again this year, a view already nudged by a resilient U.S. jobs report published last Friday.
Economists expect U.S. headline CPI to register 4.2% year-on-year for the 12 months to May, up from April’s 3.8%. On a month-on-month basis, the headline figure is forecast to decelerate to 0.5% from 0.6%. Core CPI, which excludes volatile food and energy components, is pencilled in to tick up slightly to 2.9% year-on-year from 2.8%, while the monthly core reading is projected to ease to 0.3% from 0.4%.
Precious metals, yields and the dollar
Gold prices eased on the prospect that a potential Fed rate increase this year could raise the opportunity cost of holding non-yielding bullion. More than 65% of market participants are pricing in a Federal Reserve rate hike in December, according to CME’s FedWatch Tool.
U.S. Treasury yields remained close to multi-month highs, and the U.S. dollar held firm ahead of the CPI release. The dollar index, measuring the greenback against a basket of currencies, rose 0.1%, hovering near a two-month peak reached earlier in the week. A stronger dollar can dampen demand for gold by making it more expensive for overseas buyers.
Other market notes
Separately, assessments around individual stocks such as Intel have attracted attention; some market tools and valuation models are frequently used by investors seeking to determine whether stocks like INTC are attractively priced following recent weakness. Market participants will continue to monitor earnings and capital-raising activity in the technology sector for signs of how the AI investment cycle will be funded.
Markets will watch the BoC decision, the U.S. CPI print, corporate earnings and any further geopolitical developments for fresh signals on risk appetite and the path of interest rates.