Today
The tech retreat appears to be taking a breather this morning, with S&P 500 and Nasdaq futures moving higher. Comcast is leading the advance premarket after announcing plans to split its cable and media assets into two publicly traded companies through a tax-free spinoff of NBCUniversal and Sky (more details in company news below). TSX futures are also higher as investors look ahead to a holiday-shortened week, with Canadian markets closed Wednesday for Canada Day and U.S. markets closed Friday in observance of Independence Day. Overseas, South Korea’s Kospi recovered from deeper losses after the government announced a major investment plan with Samsung and SK Hynix to expand the country’s AI and semiconductor infrastructure. The initiative includes four new memory chip plants in southwest Korea, diversifying production away from the current concentration around the Seoul area. Samsung Electronics and SK Hynix will each build two plants as part of an 800 trillion won (approximately $518 bln US) national semiconductor ecosystem project. Shares of both companies remained lower on the day, although they recovered from earlier declines alongside the broader market, with the Kospi ultimately closing down -0.20%.
Equity markets ended last week on a softer note as investors took profits in tech and semiconductor stocks after their strong rally, with the semiconductor index suffering its biggest weekly decline since March of last year. While the TSX managed to finish the week in the green, the S&P 500 and Nasdaq posted losses as investors rotated out of tech and into more defensive sectors like healthcare and real estate. Despite the recent pullback, strategists view the weakness as a healthy consolidation rather than the start of a broader downturn, citing resilient economic fundamentals and continued investor willingness to buy market dips. Investors will now turn their attention to U.S. labour market data, with Thursday’s June jobs report expected to show payroll growth of about 123,000 jobs. This comes alongside data on job openings, ADP private payrolls, layoffs, consumer sentiment, and manufacturing and services activity, all of which will shape expectations for the Fed. While the labour market in the U.S. remains strong enough to keep the Fed focused on inflation, markets will be watching for signs whether hiring is slowing, especially as companies reassess staffing needs in the age of AI.
Consumers are feeling a little better. Consumer sentiment in the U.S. improved slightly in June, as falling gas prices eased some inflation concerns. The University of Michigan’s sentiment index rose to 49.5 from a record-low 44.8 last month, helped by softening inflation expectations. Consumers expect prices to rise 4.6% over the next year and 3.3% over the longer term, helped by lower fuel costs and optimism that the economic impact of the Iran war will be temporary. Despite the improvement, confidence remains near historic lows as high living costs continue to weigh on household finances, with many Americans still pointing to elevated prices as their biggest concern. In the Eurozone, one-year inflation expectations fell to 3.5% from 4.0% in May, while three- and five-year expectations remained stable at 2.9% and 2.4%. Consumers also became less pessimistic about economic growth and more optimistic about future income, reinforcing expectations that the European Central Bank faces less immediate pressure to raise interest rates again despite some policymakers continuing to advocate for further tightening.
Economists have downgraded Canada’s 2026 outlook after the economy unexpectedly contracted in Q1, now forecasting GDP growth of just 0.7% for the year versus 1.2% previously. The weaker outlook reflects two consecutive quarters of contraction, the impact of U.S. trade uncertainty, slower immigration, softer business investment, and an unexpected drop in federal defense spending. Despite this, most economists as well as the Bank of Canada have stopped short of calling our current circumstances a recession. Inflation is still expected to average 2.6% this year before easing to the BoC’s 2% target in 2027, while unemployment is expected to peak at 6.7%. Despite the weaker growth outlook, economists expect the BoC to keep its policy rate unchanged at 2.25% through the rest of the year, with rate hikes not anticipated until Q2 2027.
Analysts believe the U.S. auto market could shrink significantly by 2040. Experts have pointed to slowing population growth, lower birth rates, tighter immigration, aging demographics, high vehicle prices, and growing alternatives such as ride-hailing (and eventually robotaxis) as reasons for reduced demand for new vehicles. A new report found that annual U.S. vehicle sales could decline by more than 2 million units, with fewer young people buying cars, older consumers accounting for an increasing share of purchases, and vehicles lasting longer, now averaging a record 12.8 years on the road, reducing replacement demand. While autonomous vehicles are arriving more slowly than expected, new trends point to a smaller, more competitive market where automakers will fight over fewer customers, which would likely lead to industry consolidation.
From coast to coast to coast. Canada may not have been playing on home soil, but that didn’t stop thousands of Canadian supporters from making the trip to SoFi Stadium in Los Angeles, while millions more watched from living rooms, fan zones, sports bars and watch parties from coast to coast to coast. After controlling much of the play and creating the better scoring chances, Canada finally broke through in the 92nd minute when Stephen Eustàquio scored the winner, sending Canada to a 1-0 victory over South Africa just moments before the match appeared destined for extra time. The win marked the men’s program’s first-ever World Cup knockout victory. Canada got a boost from the return of captain Alphonso Davies, who made his tournament debut after missing the entire group stage due to injury. Canada now advances to the Round of 16 in Houston on Saturday against the winner of today’s match between the Netherlands and Morocco. History has been made, but Canada’s World Cup journey is far from over. Go CA-NA-DA!
Diversion: Get otter here!
