Stock futures flat as U.S. and Canada appear headed for trade war
U.S. stock-index futures were little changed on Sunday, as it appeared the U.S. was on the verge of an all-out trade war with Canada, one of its biggest trading partners.
Dow Jones Industrial Average futures YM00 were up about 30 points, or 0.1%, on Sunday night. S&P 500 futures ES00 and Nasdaq-100 futures NQ00 were about flat.
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West Texas Intermediate crude CL.1 fell 1.8% on Sunday, after settling Friday at $87.06 a barrel, up about 5% on the week, as the stalemate over the Strait of Hormuz continued with no signs of a U.S.-Iran deal in sight. The U.S. is expected to announce tough, new economic sanctions against Iran on Monday. Brent crude BRN00, the global benchmark, declined Sunday as well.
Bitcoin BTCUSD was trading above $77,000, up more than 20% over the past five days, while gold GC00 was up slightly, after rising 5% last week. Bitcoin and gold prices shot higher last week after the Treasury Department announced more buybacks of longer-dated Treasuries, as bond yields and the dollar continued to rise.
An alarming selloff in long-term U.S. government bonds recently pushed yields up a two-decade high. Longer-term Treasury yields set the floor for what Americans pay to borrow on mortgages, car loans and credit cards. When yields climb, so does the cost of nearly everything people finance.
See: The Treasury’s bond-market intervention isn’t working. So what comes next?
Stocks rose Friday, but still ended lower for the week. The S&P 500 SPX fell 1.4% on the week, its worst weekly decline since July 17, according to Dow Jones Market Data. The Nasdaq COMP fell nearly 2% on the week, while the Dow DJIA dipped 0.9%. Treasury yields continued to push higher on Friday.
Talks for a new trade deal between the U.S. and Canada collapsed late Friday, raising the prospect of a trade war between the two neighbors. Canadian officials walked away from talks after they said U.S. negotiators made new, “unfair” demands at the last minute.
New 50% U.S. tariffs against about $20 billion in Canadian goods went into effect Saturday, and Canadian Prime Minister Mark Carney said Canada would impose dollar-for-dollar tariffs against some U.S. goods starting Sept. 8, focusing on sectors including steel, dairy, paper, electronics, appliances and agricultural equipment.
On Saturday, Carney described the U.S. demands as an “attack” on Canada, and said he would not “compromise Canada’s sovereignty or undermine our key industries” for what he called “a bad deal.”
In a social-media post Sunday, President Donald Trump said “Canada wants the benefits of being a State, without being one!!!”
Late Sunday, Bloomberg News reported Canada sees little chance of resuming negotiations before the midterm elections in November, and is preparing to ride out a long trade war.
While the affected goods only comprise about 5% of Canada’s exports to the U.S., “politically the rupture is considerably larger,” Stephen Innes, managing partner at SPI Asset Management, said in a weekend note. “The political trust supporting those supply chains is becoming thinner, and every additional tariff adds another grain of sand to the inflation machinery precisely when the Fed would prefer those gears running cleanly.”
Meanwhile, Wall Street is awaiting quarterly earnings from AI chip-maker Nvidia on Wednesday. Nvidia NVDA has been the S&P 500’s biggest contributor to earnings growth in seven of the past 11 quarters, according to data from Seaport Research, and its results will serve as a bellwether reading on the AI industry as a whole, which has been plagued by concerns of excessive spending on the data-center build-out.
Read more: Nvidia is the beating heart of the AI boom and the stock market — which sets up a big test
Other major companies reporting earnings this week include Salesforce CRM, CrowdStrike CRWD and Marvell Technologies MRVL.
Investors will also be looking forward to Fed Chair Kevin Warsh’s keynote address from the Jackson Hole, Wyo., economic-policy symposium on Friday, hoping to parse indications of the Fed’s strategy on interest rates. Warsh is more tight-lipped than his predecessor, Jerome Powell, and last week’s moves by the Treasury Department has made the situation even more uncertain for market-watchers.
Also see: Here’s how Bessent’s newly activist Treasury Department is undercutting the Fed’s Warsh
Joy Wiltermuth contributed to this report.