Today
Stock futures are pointing to another soft open, capping off what has been a bumpy week for equities. S&P 500, Nasdaq, and TSX futures are all trading lower this morning. Through Thursday, all three indexes were already on track to finish the week in negative territory, led by the tech-heavy Nasdaq, which was down -4.4% and on pace for its largest weekly decline since the period around Liberation Day. The TSX has held up relatively well, remaining roughly flat for the week as weakness in the materials sector, particularly gold against a backdrop of a stronger U.S. dollar, has largely been offset by gains in BlackBerry, up 21% this week after reporting stronger-than-expected first quarter earnings and raising revenue guidance, and Alimentation Couche-Tard. Overseas, chipmakers are once again leading the selloff, weighing on AI-heavy markets including Japan’s Nikkei, down -4.1%, and South Korea’s Kospi, down -5.8%. The Nikkei was pressured by a -12.5% drop in SoftBank after reports that OpenAI may delay its IPO until 2027, postponing a potential liquidity event for one of its largest investments.
Dollar bulls are back. Speaking of the dollar, Wall Street has turned bullish on the USD, with major banks noting that Chair Kevin Warsh’s strong anti-inflation stance has revived confidence in the greenback. Strategists at JPMorgan, Goldman Sachs, Bank of America and others now expect further dollar gains as markets price in additional Fed rate hikes, helped by resilient U.S. economic growth, strong AI-driven investment, and continued capital inflows into U.S. assets. The Bloomberg Dollar Spot Index has risen about 2% in June, reversing last year’s de-dollarization narrative, while hedge funds have built their largest bullish dollar positions in years. Although much of the Fed’s tightening may already be priced in, the consensus is that the combination of a hawkish Fed, U.S. economic outperformance, and AI-related productivity gains should keep the dollar strong, particularly against lower-yielding and oil-importing currencies.
Earnings edge. Canadian companies are expected to outpace their U.S. peers in earnings growth over the next two quarters, with the TSX expected to deliver profit growth of 36.4% in Q2 and 40% in Q3, compared with roughly 23% for the S&P 500. The rise is being driven primarily by energy and mining companies, though Canada’s tech sector is also expected to post strong gains. Improving business sentiment under Mark Carney, along with plans for major infrastructure, natural resource development, and defense spending, has help improve investor confidence and prompted some strategists to raise targets for Canadian equities. While lower oil prices could temper energy earnings later this year, many investors believe Canada is entering a broader economic recovery, making Canadian stocks more attractive.
Testing the waters. Chinese automakers are expanding into Canada despite strict import quotas because they see us as a gateway to the much larger U.S. market. Companies including BYD, Chery, Lotus, and Changan are opening dealerships, testing vehicles, and building dealer networks even though Canada limits low-tariff imports to 49,000 vehicles annually, leaving little near-term profit potential. Experts say Canada’s similar regulations, consumer preferences, and dealership networks make it an ideal testing ground for an eventual U.S. launch if trade barriers are relaxed. While the federal government is cautiously opening the market as relations with the U.S. become more strained, U.S. automakers and policymakers remain concerned that Canada could become a backdoor for Chinese EVs into America.
Joining the party. China’s domestic tech IPO market is rebounding as the country pushes to support chip, AI, robotics, and other strategic technology companies amid its rivalry with the U.S. Chinese tech firms have raised $3.1 billion from onshore listings so far this year, more than five times last year’s pace, with nearly 50 companies (worth close to $19 bln) also expected to IPO soon. The biggest potential deal is memory-chip maker ChangXin Memory Technologies’ planned $4.4 billion Shanghai listing, which could make 2026 the strongest year for Chinese tech IPOs since 2023. Regulators are easing rules for companies and encouraging Hong Kong-listed firms to seek mainland listings, giving startups and their venture-capital backers more exit opportunities. Strong demand for recent mainland tech IPOs suggests investors are eager for exposure to China’s AI and semiconductor push, though the boom is closely tied to government support and the broader global enthusiasm for AI.
Recent fund flow data is showing that investors pulled money from U.S. equities for the first time in three months, with record withdrawals from tech funds signaling that the AI trade may be cooling. According to the report, U.S. equity funds shed $8.5 billion in the week through June 24, with technology funds leading the retreat, with a record $9.3 billion in outflows. This comes as technology and AI companies are front and centre with Apple experiencing a massive slide today, while Micron forecasted blowout sales earlier in the week. This week’s flows marks a reversal from the previous week, when tech funds had drawn an unprecedented $19.2 billion. The report also showed European funds continuing to be under pressure with an 11th straight week of outflows, money market funds shedding $25.5 billion, while investors shifted instead into fixed income funds which added $16.6 billion.
No home field advantage. Despite co-hosting the World Cup and advancing to the knockout stage, Canada will head to Los Angeles to face South Africa at LA Stadium (better known as SoFi Stadium, but temporarily renamed under FIFA’s commercial naming rules), rather than playing a Round of 32 match on home soil. By finishing second in Group B, Canada fell into a predetermined part of the knockout bracket, while only the group winner (Switzerland) remained in Vancouver. Canada had been expected to face higher-ranked South Korea, but South Africa’s surprise 1 to 0 victory over the Koreans secured the matchup instead. Looking for a silver lining, South Africa, ranked 54th in the world, is viewed as a more favourable opponent. While the team will undoubtedly miss having a raucous home crowd behind them, the quieter setting in LA may provide an opportunity to recover, reset, and focus ahead of the biggest match in Canadian men’s football history. Canada kicks off against South Africa on Sunday at 3:00 pm ET. GO CA-NA-DA!
Diversion: You’re out…
