African economies see $99.4bn GDP upgrade amid renewed Iran war shocks

TSX futures edged upward on Monday as oil prices declined and gold surged, reflecting optimism that Iran tensions may ease. The S&P/TSX 60 index futures climbed 6 points, or 0.3%, by 07:41 ET, while the S&P/TSX composite index ended the day down 0.5% at 35,788.18, marking its lowest close since October 14. The index fell 1.1% for the week.

Analysts are eagerly awaiting the Bank of Canada's interest rate decision on Wednesday, with most economists expecting a quarter-point hike, followed by another in March. U.S. stock index futures also rose on Monday, after tech-driven losses hit Wall Street, with investors now focusing on a crucial Federal Reserve policy announcement and major earnings reports.

The S&P 500 futures increased by 17 points, or 0.2%, while the Nasdaq 100 futures rose by 95 points, or 0.3%, and the Dow futures climbed by 190 points, or 0.4%. The S&P 500 and Nasdaq Composite had two weeks of losses, primarily due to significant drops in tech and AI-related stocks. Meanwhile, Dow Jones Industrial Average saw a boost from defensive sectors such as healthcare, utilities, and industrials.

The Federal Reserve is set to convene a two-day meeting on Tuesday, with a consensus that rates will remain unchanged the following day. September saw the first rate hike since 2023, but some Fed officials have downplayed the urgency of an immediate increase. Fed Chair Kevin Warsh's post-decision press conference will be closely watched, as there is a 73% chance of a rate hike at the final December meeting, according to CME's FedWatch Tool.

Additionally, the third-quarter U.S. GDP advance reading and September's personal consumption expenditures price index could provide further clues about interest rates this week. Earnings from tech giants like Alphabet and Microsoft are slated for Wednesday, while Amazon's results are due on Thursday. Tech sector volatility has been a concern, given the high debt levels incurred to fuel AI infrastructure development and rising borrowing costs.

Oil prices also dropped, following reports that Qatari mediators visited Tehran to try and de-escalate tensions with Washington. Recent reports suggested that U.S. President Donald Trump might consider resuming attacks on Iran after the upcoming midterm elections in November. Trump hinted at another military operation against Iran on Sunday, which prompted Iran to threaten retaliatory measures.

Ongoing hostilities between Iran-backed Houthi militants in Yemen and Saudi Arabia have added to concerns over potential disruptions to recovering oil flows from the Middle East. Gold prices rebounded on Monday, after sliding more than 4% the previous week, as easing oil prices helped alleviate some inflation concerns. Higher energy costs could prolong inflationary pressures and reduce the ability of central banks to ease monetary policy.

Elevated interest rates can make interest-bearing assets more appealing compared to non-yielding assets like gold, prompting analysts at Neuberger to predict volatility in the coming weeks due to the convergence of third-quarter results, the Fed meeting, and U.S. midterm elections.