Canada’s S&P/TSX composite index rose 0.22% on Monday as global crude prices plunged more than 5% after Washington and Tehran paused their fighting. U.S. indexes climbed alongside it, rebounding from weekly declines ahead of the Federal Reserve’s rate decision and mega-cap technology earnings.
Canada’s main stock index traded higher on Monday as a sharp decline in oil prices boosted risk appetite, with investors also taking comfort from a pause in hostilities between the United States and Iran. At 14:24 ET (18:24 GMT), the S&P/TSX composite index rose 77 points, or 0.22%, to 35,449.88, just shy of the all-time closing high reached earlier in the week.
U.S. indexes reverse last week’s slide
U.S. stocks opened sharply higher as falling crude oil prices eased inflation concerns, lifting investor sentiment at the start of a week carrying the Federal Reserve’s interest rate decision and earnings from several mega-cap technology companies.
At 09:32 ET, the S&P 500 rose 0.8% to 7,469.16 and the Nasdaq Composite gained 0.9% to 25,185.80. The Dow Jones Industrial Average advanced 1.2% to 52,561.77. The rebound follows weekly declines across all three major indexes, with the Nasdaq shedding more than 2% last week.
Markets had come under pressure from escalating tensions in the Middle East, concerns over hefty artificial intelligence-related capital spending by companies including Alphabet and Tesla, and renewed trade uncertainty after the Trump administration imposed fresh tariffs.
But a more than 5% plunge in global crude prices triggered the bounce, after Washington halted its military campaign against Iran and Tehran suspended retaliatory strikes, easing fears over disruptions to critical transit corridors in the Middle East. The sudden retreat in energy costs tempered anxieties that a burst of energy-fueled inflation would force central bankers to keep borrowing costs elevated.
Magnificent Seven earnings meet a Fed decision
Attention now turns to quarterly earnings from the Magnificent Seven mega-cap technology companies, including Apple, Microsoft, Amazon and Meta Platforms. The sector enters the reporting stretch under intense scrutiny, with investors increasingly questioning towering valuations, massive capital expenditure budgets, and the group’s ability to deliver the outsized top-line beats required to justify current multiples.
Concerns over booming artificial intelligence capex surged earlier in the reporting season after earnings from Alphabet and Tesla. Alphabet’s aggressive infrastructure spending upgrade and Tesla’s accelerating cash burn underscored fears that Silicon Valley’s AI buildout is consuming cash faster than it can generate near-term revenues, compressing profit margins across the sector.
The Federal Open Market Committee convenes for a two-day policy meeting concluding on Wednesday. While policymakers are widely expected to keep benchmark interest rates unchanged, investors will parse Fed Chair Kevin Warsh’s press conference for clues on the central bank’s inflation outlook and the future path of monetary policy. Traders will also monitor fresh second-quarter U.S. GDP figures and the June Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge.
Gold gains as Treasury yields slide
Gold prices rose, supported by sliding Treasury yields and a weaker U.S. dollar. Spot gold rose 0.8% to $4,086.87 an ounce by 09:32 ET. Meanwhile, gold futures expiring in August gained 0.4% to $4,086.80 an ounce. The trajectory of Fed interest rates is crucial for gold, as the non-yielding asset tends to underperform in elevated rate environments.
Source: Investing.com
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