Stock futures are moving higher this morning as investors shift their attention from escalating Middle East tensions towards a strong start to earnings season, with 3M and General Motors posting better-than-expected results. Semiconductor stocks led the rebound as investors bought into the recent weakness, while markets look ahead to earnings from major tech companies for updates on AI spending and second-half demand. Although renewed fighting between the U.S. and Iran continues to keep oil prices elevated and geopolitical uncertainty heightened, investors appear to be brushing off some of those concerns with corporate earnings and AI investment expected to be the primary drivers of sentiment in the weeks ahead.
Not the hockey sticks?!? Trump is looking to impose a fresh 50% tariff on some Canadian goods over what he said was unfair treatment of American alcohol, cars and dairy, further increasing trade tensions. The items subject to the new tariff include milk, hockey equipment, beer, and plywood. The list, however, does not include major resource imports such as energy, potash, and critical minerals. Also omitted were goods covered by industry specific duties, such as autos and steel. Trump did his homework this time as the items on the new tariff list will have no exemptions for exporters shipping under the rules of the existing North American trade pact between the U.S., Canada and Mexico. The Office of the U.S. Trade Representative is estimating that $20 billion worth of imports, about 5% of total Canadian goods sent to the U.S. last year, would be affected. The tariffs are set to take effect in 30 days, but as we should know by now, that could all change with Trump having made similar threats before, only to pull back after negotiations or because of market concerns.
Canadian financial stocks are trying to overtake energy as the top-performing sector in the Canadian equity market, driven by strong bank earnings, resilient capital markets and improved regulatory conditions following lower capital requirements for lenders. As of right now, the financials index is up roughly 24% YTD on a total return basis while the energy index is up 29%, but some see the gap closing as geopolitical tensions ease and energy prices retreat from their highs. Adding to this, investor flows have shifted from energy toward banks and other financial companies. But while analysts see further upside for financials, some have highlighted that Canadian bank valuations are well above historical averages, suggesting future gains are likely to be more modest compared to the sector’s strong first-half performance.
Yesterday’s June inflation report offered further evidence that underlying price pressures remain contained in Canada, with headline inflation slowing to 2.8% and the BoC’s preferred core inflation measures falling below 2% for the first time since 2020. While lower gasoline prices drove much of the improvement, economists noted that broader inflation remained under control as weak consumer demand limited businesses’ ability to raise prices, despite temporary increases in travel-related costs tied to the World Cup. The data reinforces expectations that the central bank can keep interest rates unchanged in the near term, with markets expecting another rate hold in September.
The British pound has strengthened against the Canadian dollar for nearly four years, but technical indicators suggest the rally may be due for a short-term pullback after reaching a decade-high near 1.90. Potential support lies around 1.8560 and 1.8130, while improving Canadian inflation and expectations for relatively tighter BoC policy could provide additional support for the loonie. This comes after UK government bonds sold off yesterday after newly appointed PM Andy Burnham suggested he would seek greater flexibility within the government’s fiscal rules, reigniting investor concerns about rising public debt and fiscal discipline. The increase in gilt yields and weaker pound reflected fears of higher government borrowing, while rising oil prices also reinforced expectations that the Bank of England may need to raise interest rates further. Investors remain focused on the new government’s fiscal policy, with markets viewing the upcoming budget as a key test of its commitment to maintaining credibility.
The recent record-breaking $50.1 million sale of the T. rex “Gus” highlights the growing demand for rare dinosaur fossils as alternative investment assets. The dino became the most expensive fossil ever sold at auction, beating previous records set by the Stegosaurus “Apex” and T. rex “Stan.” If you happen to be in the market for a dinosaur, it’s important to do your homework. The auction of the T. rex “Shen” a few years ago was cancelled after allegations that the fossils contained significant cast components and lacked sufficient documentation, raising concerns over authenticity, transparency, and valuation. While recent sales point to strong interest from wealthy collectors, it has also renewed debates over whether scientifically significant fossils should remain in private hands, with paleontologists arguing that museum ownership is essential to preserve public access and support ongoing research.
Diversion: To the rescue
