Futures connected to Canada’s main stock index were trading lower Thursday morning as market participants positioned for a pair of U.S. inflation reports that could shape Federal Reserve policy expectations, while renewed geopolitical strain in the Middle East kept crude prices firm.
By 07:12 ET (11:12 GMT), the S&P/TSX 60 index standard futures contract was down 5 points, or about 0.3%.
Stocks in Canada finished the previous session on a softer tone. The S&P/TSX Composite Index closed down 0.6% at 35,906.56 on Wednesday, marking its lowest closing level since September 1. That drop came as Brent crude futures climbed back above the $100-a-barrel threshold and benchmark 10-year U.S. Treasury yields reached their highest levels since 2023, pressuring investor sentiment.
U.S. futures and recent Wall Street moves
U.S. futures were trading mixed ahead of the key economic releases. As of 07:26 ET, the Dow futures contract had gained 84 points, or 0.2%, S&P 500 futures were roughly unchanged, and Nasdaq 100 futures were lower by 106 points, or about 0.4%.
On Wednesday, major U.S. equity benchmarks fell. The Dow Jones Industrial Average declined 0.8%, the S&P 500 slipped 0.5%, and the Nasdaq Composite dropped 0.6%, the third consecutive session of losses for the large-cap indexes.
Energy and fixed income
Energy markets have been a central focus. The Brent crude contract topped $102 a barrel on Thursday as heightened U.S.-Iran hostilities raised the prospect of supply disruptions through the Strait of Hormuz. The jump in oil has revived concerns that a prolonged energy shock could lift inflation and influence the Fed to raise interest rates further.
On the sovereign debt front, the benchmark 10-year U.S. Treasury yield eased about 20 basis points to 4.82% after reaching as high as 4.85% on Wednesday, a level last seen in November 2023. The Treasury Department’s announcement of a $6 billion buyback of longer-dated government debt fell short of some analysts’ expectations, as some had anticipated repurchases of up to $10 billion.
Inflation readings and policy expectations
Market attention is focused on Thursday’s Producer Price Index (PPI) report, the first of two major inflation indicators scheduled this week, ahead of the Labor Department’s Consumer Price Index (CPI) release on Friday. These readings are widely viewed as potential drivers of Fed deliberations.
Traders are pricing in at least one Federal Reserve rate increase this year. Ahead of the central bank’s two-day September meeting, markets assign about a 60% probability to a rate hike at the meeting’s conclusion next Wednesday.
Across the Atlantic, eurozone officials at the European Central Bank are also confronting energy-induced inflation risks and are widely expected to raise rates later in the day, although the ECB is not anticipated to give specific forward guidance.
Precious metals and corporate calendar
Gold was volatile as participants weighed a softer U.S. dollar against the pull of higher Treasury yields. At 07:38 ET, spot gold had dropped 0.4% to $4,387.55 an ounce, while gold futures fell 0.7% to $4,430.45 an ounce. Gold has remained near the $4,400 level after rebounding from a floor close to $4,000 in July.
On the corporate front, cloud-computing heavyweight Oracle and design-software firm Adobe are set to report quarterly results after the market close. Those earnings reports are expected to offer additional insight into the strength of spending on artificial intelligence infrastructure.
Apple was in focus this week after unveiling its first foldable iPhone at the company’s first major product event under new Chief Executive John Ternus. Apple shares finished 0.3% lower in the prior session.
Outlook
Traders and investors are entering a period of potentially heightened volatility as the week’s inflation data and central bank decisions intersect with crude market tensions and scheduled corporate results. The interaction of energy prices, sovereign yields and incoming data is likely to be the key determinant of near-term risk sentiment.