Canada Fires Back, Oil Nears $100: 8 Key Items Shaping the Stock Market Tuesday
These are the early headlines and other items poised to influence the market at the start of trading Tuesday. As we share this collection of market drivers, U.S. equity futures point to a lower market open.
1. Canada imposed tariffs of 15% to 50% on hundreds of products from the US on Tuesday, as Prime Minister Mark Carney bets that standing up to President Donald Trump will eventually help Ottawa’s negotiating position with its biggest trading partner. Carney’s government increased the import tax on many US steel items to 50% from 25%, and applied tariffs to a range of consumer goods — motorcycles, cosmetics, cheese and more — at 12:01 a.m. New York time. (Bloomberg)
So far, U.S. officials have declined to specify how or when President Trump may respond with fresh measures of his own, but there is little reason to think there won’t be a response of some kind before too long. Odds are this will add to growing geopolitical unease following Yemen’s Tehran-backed Houthis attacking four cities in the south of U.S. ally Saudi Arabia.
Leading to our next item, shipping traffic through the Strait of Hormuz slowed at the start of this week, after Iran threatened Monday to retaliate for any new U.S. attacks. The number of reported commodity vessels sailing through the Strait of Hormuz totaled seven on Monday, compared with eight on the previous day per data from Kpler.
2. Brent oil approached $100 a barrel after Saudi Arabia said operations at several energy facilities in the kingdom’s south were halted by attacks. (Bloomberg) Copper extended gains, hitting a record for a second straight session, as tight near-term supplies and expectations that the US will impose tariffs on imports of refined metal buoyed prices. (Bloomberg) World food prices rose in August to their highest since late 2022, as adverse weather and war disruption in the Black Sea heightened concern over supply of staples, the United Nations’ Food and Agriculture Organization said on Friday. Extreme heat and drought in Europe, the threat of a severe El Nino weather pattern and trade upheaval caused by the Ukraine and Iran wars have unsettled agricultural markets, pushing grain prices to three-year highs and sugar to a one-year peak. (Reuters)
Those data points and others, including the pricing data contained in last week’s August PMI reports from ISM suggest little in the way of downward inflation pressures ahead of the August CPI and PPI data later this week. As of now, the market expectation is headline August CPI will remain unchanged at 3.4% on a year-over-year basis, with the core reading seen dipping to 2.4% from 2.5% in August.
What we see in the market expectations for August PPI is quite different. The headline figure for August is expected to come in between 5.1%-5.3% on a year-over-year basis, up from 4.7% in July. Not as hot as the 5.8% register for April and May, but clearly moving in the wrong direction. Core PPI for August is expected to rebound to 4.6% on a year-over-year basis after trending lower in July to 4.2%.
Heading into those two inflation reports, the CME FedWatch Tools pegs the odds of a September rate hike at just over 58%.
3. Anthropic is close to awarding Morgan Stanley and Goldman Sachs the most coveted roles in its blockbuster Wall Street debut, as the AI behemoth prepares to unveil its initial public offering paperwork as soon as next week. Morgan Stanley was in pole position to secure the prized “lead left” role, according to four people familiar with the matter. Goldman is expected to act as the IPO’s stabilization agent, a lucrative appointment overseeing the crucial first sessions of trading when Anthropic lists. (FT) Anthropic is expected to begin marketing its initial public offering in mid-October at the earliest and complete the listing days before the U.S. midterm elections in November, people familiar with the matter said on Friday. (Reuters)
Many eyes will be pouring over Anthropic’s much anticipated S-1 filing with the SEC, digging into the business, its financials and spending, and the multi-year third-party AI industry forecasts. No doubt there will be those invested in OpenAI that will be among that cohort given prospects for it to go public sometime between late this year and next year. Others will be wait to see which investment banks have been selected to lead the transaction and reap investment banking fees.
We at the Portfolio fall into all three groups given our positions in Morgan Stanley ($MS), Broadcom ($AVGO), and Neostellar ($NSLR).
4. Foxconn’s third-quarter performance is expected to outperform market expectations given strong AI-related demand, the Taiwanese contract electronics maker said on Saturday, though it offered caution about “volatile” global politics… It said revenue last month rose 51.98% from a year earlier to T$921.8 billion ($29.15 billion), the highest amount ever for August and the second month in a row it has exceeded T$900 billion. (Reuters)
Because Reuters shared this on Saturday, it’s possible many in the U.S. may have missed this over the Labor Day long weekend, which is one of the reasons why we’re pointing it out. Another reason is it comes on the heels of strong AI and data center guidance from Dell ($DELL) last week, and brings strong support not only for the AI and data center picture, but also the seasonal ramp in new smartphone model production.
That’s timely, in our view, given that today is Apple’s ($AAPL) Rise and Shine event that is widely expected to unveil the company’s first foldable iPhone, as well as several other devices.
5. Huawei and Xiaomi launched new flagship foldable smartphones on Monday, stepping up competition in China’s premium handset market ahead of Apple’s product launch later this week. The devices are priced from 19,999 yuan ($2,980), with the top-end version costing 24,999 yuan ($3,725). Sales begin on September 12. “Pricing right now is a real challenge, because memory costs have risen sharply. We adopted a lot of new technology, and the cost pressure has been enormous,” Huawei Executive Director Richard Yu told a press conference. (Reuters)
We’ve seen a growing list of companies look to front run Apple events in recent years, and the timing from Huawei and Xiaomi certainly lands in that camp. We can also put Samsung ($SSNLF) in that category given the unveiling of its Galaxy Z Fold 8 that was released into the wild roughly a month ago.
Apple watchers have been teased by potential design leaks in recent days, but one of the things the investment community is waiting to see are the price points for the foldable iPhone as well as those for other announced devices. With chip costs moving up, especially those for memory, how much of that Apple is aiming to pass along will influence margin expectations. Our thinking is Apple will highlight its recently announced Apple Upgrade leasing program with Klarna ($KLAR) that allows for monthly payment options as a way for customers to get over any pricing hump.
In addition to the hardware and other announcements, today’s Apple event is, in our view, the formal debut of new CEO John Ternus. While we don’t expect radical changes to of the gate, we will be listening closely to what Ternus says about innovation and production development. We’ll also be looking to see how today’s demonstrations weave in the use of Apple Intelligence and Siri AI as a means to jumpstart consumer interest in both.
6. Bloom Energy Corp., Illumina Inc. and Everpure Inc. will join the S&P 500 in the latest quarterly rebalance, S&P Dow Jones Indices said Friday. The three companies will replace Molson Coors Beverage Co., Trade Desk Inc. and Builders FirstSource Inc. before the start of trading on Sept. 21, according to the index provider. (Bloomberg)
Shares of Bloom Energy ($BE) moving into the S&P 500 should be a short in the arm for our EPS All-Stars holdings. We view Bloom’s addition to the S&P as one that will drive assets into the shares. To us, however, the multi-year energy demand outlook fueling the company’s prospects amid AI and data center expansion and grid expansion are the real tailwinds investors should be focused on.
The removal of Builders FirstSource ($BLDR) from the S&P 500 means those shares are likely to become a source of funds in the near-term, adding to our recent decision to remove them from the Portfolio.
7. Economic data today per TipRanks: NFIB Small Business Optimism Index (August), ADP Employment Change Report (Weekly), Used Car Prices (August), Consumer Inflation Expectations (August).
8. Companies reporting today per TipRanks: AM – ABM Industries ($ABM), United Natural Foods ($UNFI). PM – Casey’s General Store ($CASY), Mission Produce ($AVO), ServiceTitan ($TTAN).
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At the time of publication, TheStreet Pro Portfolio was long AAPL, AVGO, BE, MS, and NSLR.
