Global equities extended their declines as tensions in sovereign bond markets deepened, exacerbated by rising oil prices and reports of major tech firms seeking billions in debt financing. Wall Street futures mirrored this downward sentiment after U.S. markets closed lower the previous day. In Canada, TSX futures turned red following the country's main stock market's steepest drop in four months. Investors are awaiting earnings reports from Aritzia Inc., NovaGold Resources Inc., and Tilray Brands Inc.
On Wall Street, Broadcom was reportedly seeking $50 billion in financing, while SpaceX planned to issue $30 billion in investment-grade debt and raise $10 billion in loans to purchase chips from Nvidia, a major shareholder in SpaceX. Nigel Green, CEO of deVere Group, cautioned about a risky cycle where Nvidia is essentially bankrolling its own customers, leaving global investors vulnerable if expected profits do not materialize. Green highlighted that debt repayment schedules could strain bond funds and pension pots worldwide.
Oil prices surged due to supply concerns from the Middle East, particularly amid increased attacks on shipping in the Persian Gulf and the Strait of Hormuz. Brent crude futures rose 5.08% to $105.30 a barrel, while West Texas Intermediate (WTI) crude futures climbed 5.06% to $92.75. Analyst Saul Kavonic noted that the frequency of Iranian attacks on ships is at its highest since the war began, further elevating prices. Meanwhile, spot gold increased 0.3% to $4,122.99 an ounce, and U.S. gold futures added 0.18% to $4,147.90.
The Canadian dollar weakened against the U.S. dollar, trading at $1.4267 per US$1, down about 3.06% over the past month. The U.S. dollar index rose 0.14% to 102.38, while the euro and British pound both fell. In bonds, the yield on the U.S. 10-year note increased to 5.356%. Economic data releases for the day include U.S. initial jobless claims and wholesale trade sales for August.