TSX futures dip as traders eye Canadian bank earnings, Fed rate cut wagers

Investing.com - Futures linked to Canada’s main stock index pointed lower on Monday, with investors gearing up for the release of a host of Canadian bank earnings this week.

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By 07:42 ET (12:42 GMT), the S&P/TSX 60 index standard futures contract had dropped by 6 points, or 0.3%.

On Friday, the S&P/TSX composite index rose by 0.6%, logging a seventh consecutive month of gains, the longest such streak since 2021. Underpinning much of the rise in the commodity-heavy average has been a jump in precious metals like gold and silver.

The rally has helped to mitigate the impact of wider concerns around an potential artificial intelligence bubble, which threatened to weigh on sentiment throughout last month. Still, these fears have shown signs of easing.

U.S. futures inch down

U.S. stock futures also edged lower, as investors weighed rising expectations for an interest rate cut by the Federal Reserve in December.

S&P 500 Futures had inched down 42 points, or 0.6%, Nasdaq 100 Futures had fallen 182 points, or 0.7%, and Dow Jones Futures had slipped 220 points, or 0.5%, by 06:28 ET.

For the week, which was shortened by the Thanksgiving holiday, all three of major indices gained by more than 3%. The benchmark S&P 500 and blue-chip Dow Jones Industrial Average also closed out a positive November, although the tech-heavy Nasdaq Composite ended down 1.51%, echoing recent concerns over the sustainability of soaring tech valuations and soaring -- and often debt-fueled -- spending on AI.

Underpinning sentiment have been increasing bets that the Fed will deliver a quarter-point interest-rate cut at its December 9-10 gathering. The odds of a cut have soared to around 88% from roughly the mid-40s only a little over a week ago.

Dovish signals from Fed officials -- including comments suggesting that conditions may warrant a rate reduction -- have helped fuel those expectations, though uncertainty remains given limited fresh data because of a recent federal government shutdown.

This week will see a raft of U.S. economic data, including gauges of manufacturing and services sector activity, consumer sentiment, and private payrolls. Big-box retailers will also likely be under spotlight after data indicated a surge in online spending during the annual Black Friday sales event last week.

Next Fed Chair appointment in focus

At the same time, markets are assessing President Donald Trump’s statement that he has decided on his pick for the next Federal Reserve chair, although Trump declined to provide the exact name.

According to recent reports, the shortlist under consideration includes White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Christopher Waller. Hassett is reportedly the frontrunner for the role, but he downplayed these predictions, saying only that he would be "happy to serve."

A shift in leadership could influence the Fed’s policy trajectory significantly. Reports have repeatedly indicated that Trump could select a close ally to replace current Fed Chair Jerome Powell, whose term ends in May.

Given Trump’s repeated calls for aggressive and rapid rate cuts, this could signal a more “dovish” change in looser monetary policy, which could further support equities, especially rate-sensitive sectors such as retail and growth stocks.

Powell is due to speak later in the day. However, the Fed is currently in its pre-meeting blackout phase, meaning he is not anticipated to provide fresh comments on the trajectory of interest rates.

Oil rises as OPEC+ holds output steady

Oil prices rose more than 1%, supported by OPEC+’s reaffirmation to hold output steady during the first quarter, and by renewed supply concerns stemming from geopolitical tensions.

As of 06:46 ET, Brent Oil Futures expiring rose 1.1% to $63.11 per barrel, while West Texas Intermediate (WTI) crude futures jumped 1.2% to $59.26 per barrel.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday reiterated its plan to pause production increases through the first quarter of next year, maintaining voluntary cuts of roughly 3.24 million barrels per day.

The group signaled a cautious approach as it confronts uneven demand trends and what it sees as potential oversupply in oil markets next year.

Additional support for crude came from a series of attacks over the weekend on Russian energy infrastructure, which disrupted export operations.

The Caspian Pipeline Consortium, a major conduit for Kazakh and Russian crude shipments through the Black Sea, said it had suspended loadings after a naval drone strike caused significant damage to a mooring point at its Novorossiysk terminal.

Gold climbs

Gold prices spiked to their highest level in six weeks, as traders eyed the wagers on a rate cut and a change in Fed leadership.

Spot gold was up 0.5% at $4,249.05 an ounce by 07:49 ET, after reaching a six-week high of $4,256.2 earlier in the day. U.S. gold futures for February rose 0.7% to $4,283.25 an ounce.

Silver also touched a new all-time high, with analysts cited by Reuters pointing to help from gold’s rally and hopes for more industrial demand in 2026.