Today
U.S. equity futures are pointing to a higher open following yesterday’s rally, which pushed the Dow to a record closing high, while TSX futures are also higher after Canadian markets come off a long weekend. Investors remain focused on a strong earnings season, with results continuing to outpace expectations and helping offset concerns around AI spending, elevated valuations and geopolitical tensions. Following strong results from Palantir, with shares up +15% in premarket trading at the time of writing, attention now turns to SpaceX’s first earnings report as a public company, due after today’s close. Investors will likely focus on the company’s AI-related capital spending, Starlink growth, and any commentary on a potential merger with Tesla. Markets are also getting a boost after Qatar announced that mediators have drafted a potential agreement to restart U.S.-Iran talks as they work toward a short-term deal to de-escalate tensions, though no agreement has yet been finalized. The proposed framework is aimed at preventing further military escalation and will look to restore shipping through the Strait of Hormuz, where negotiations remain stalled as Iran continues to insist on controlling maritime traffic.
U.S. stocks and bonds rallied yesterday as optimism over easing tensions between the U.S. and Iran pushed oil prices lower, reducing inflation concerns and improving investor sentiment. The S&P 500 is now in striking distance of its record high, led by strength in mega-cap tech stocks, while strong U.S. manufacturing data reinforced confidence in the economy. Hopes that shipping through the Strait of Hormuz could normalize helped crude oil fall, supporting expectations that inflation pressures could moderate if geopolitical risks continue to ease. Looking ahead, investor this week will focus on corporate earnings, U.S. jobs data, though any developments in the Middle East will also remain an important driver of overall market sentiment.
Co-ordinated intervention. The U.S. and Japan carried out their first coordinated currency market intervention in 15 years yesterday to support the yen after it weakened to a four-decade low above ¥163 per U.S. dollar. Japan is estimated to have spent ~$53 billion in a record single-day intervention, while U.S. Treasury Secretary Scott Bessent signalled Washington is prepared to provide further support if needed. While the coordinated intervention has strengthened the yen in the short term and improved market sentiment, analysts caution that continued appreciation will likely require narrower interest rate differentials and further Bank of Japan tightening. The next test is whether the yen can strengthen beyond the key ¥155 per U.S. dollar level, which many strategists see as critical to sustaining the currency’s recovery. A move below ¥155 could trigger additional yen buying as speculative short positions unwind, exporters increase dollar sales, and market sentiment shifts away from buying dollar dips.
China’s manufacturing sector continued to expand in July, though at its slowest pace in four months, as production and new orders moderated amid weak domestic demand and elevated costs. The private Caixin/S&P Global manufacturing PMI eased to 50.9, contrasting with official data showing factory activity slipping back into contraction, while export orders returned to modest growth and manufacturers continued hiring for a second consecutive month. Chinese policymakers have pledged to support growth through faster infrastructure spending rather than broad new stimulus, as easing input cost pressures and improving business sentiment provide some support. And while China’s economy continues to face deflationary pressures from weak consumer demand, falling private investment, and the property downturn, its long-term outlook remains supported by productivity gains, high savings, infrastructure investment, and the expansion of higher-value industries such as AI, EVs, and renewable energy.
Semiconductor stocks experienced their worst month since the 2008 financial crisis in July, as investors grew more concerned that the rapid pace of AI spending may not be sustainable. The Philadelphia Semiconductor Index fell 21% during the month, with volatility driven by uncertainty over future big-tech capital expenditures, rising competition, and the introduction of more efficient open-source AI models. While strong earnings from companies like Amazon and Microsoft reaffirmed near-term AI investment plans and sparked a short-term rebound, investors are becoming more cautious about the longer-term outlook as profit growth and margins are expected to normalize. Despite the recent selloff, record inflows into semiconductor ETFs suggest many investors view the pullback as a buying opportunity, though the sector is likely to remain volatile as markets reassess the durability of the AI investment cycle.
This isn’t exactly where anyone expected the Blue Jays to be after last year’s remarkable run. While it’s not entirely clear what direction the front office is taking, the trade deadline signalled a willingness to move on from several key pieces. Goodbye to Jeff Hoffman, whose otherwise strong Jays stint will inevitably be remembered for surrendering the game tying ninth inning home run to the Dodgers’ ninth batter in Game 7 of the World Series. Goodbye to Daulton Varsho, who was emotional yesterday discussing the trade and, in a twist, made his Astros debut against his former teammates the very day the deal was announced. Goodbye to Kevin Gausman and his family after nearly five seasons in Toronto. Beyond the game, Gausman clearly embraced his teammates, the coaching staff, the city, the fans and the country. Whatever comes next, this deadline closes the door on a group that helped define one of the most memorable stretches of Blue Jays baseball in years.
Diversion: Like playing a ghost 
