Global markets fell as expectations for imminent interest rate hikes by the U.S. Federal Reserve and debt-backed corporate spending on AI weighed on investor sentiment.

Wall Street futures were in the red after the Nasdaq closed sharply lower yesterday, dragged down by declines in the megacap technology stocks including SpaceX and Alphabet.

TSX futures followed sentiment lower.

On Wall Street, markets are watching earnings from FedEx Corp. and Carnival Corp.

“These are far from dull markets,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “The former generals of the market appear to have lost momentum, and investors are rotating into other areas of the market that are more defensive, less AI-focused and offer more predictable cash flows.”

Overseas, the pan-European STOXX 600 was down 0.77 per cent in morning trading. Britain’s FTSE 100 declined 0.326 per cent, Germany’s DAX fell 1.03 per cent and France’s CAC 40 gave back 0.6 per cent.

In Asia, Japan’s Nikkei closed 3.55 per cent lower, while Hong Kong’s Hang Seng dropped 1.82 per cent.

Oil prices fell, extending yesterday’s losses, on signs of some progress in restoring crude flows through the Strait of Hormuz following U.S.-Iran peace talks.

Brent crude futures were down 0.73 per cent to US$77.33 a barrel. West Texas Intermediate (WTI) eased 0.62 per cent to US$73.40 a barrel.

Prices fell more than 3 per cent on Monday after the United States granted Iran a 60-day sanctions waiver following initial peace talks, and as officials reported a lull in hostilities in Lebanon under a broader agreement.

In other commodities, spot gold was down 1.8 per cent to US$4,116.07 an ounce. U.S. gold futures for August delivery fell 1.6 per cent to US$4,133.70. 

The Canadian dollar weakened against its U.S. counterpart.

The day range on the loonie was 70.47 US cents to 70.67 US cents in early trading. The Canadian dollar was down about 2.6 per cent against the greenback over the past month.

The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.13 per cent to 101.16, after reaching its highest level in more than a year. The dollar was pegged at $1.4180.

The euro declined 0.16 per cent to US$1.1411. The British pound dropped 0.17 per cent to US$1.3227.

In bonds, the yield on the U.S. 10-year note was last down at 4.487 per cent.

Japan and Euro zone’s PMI

8:15 a.m. ET: U.S. ADP Employment (four-week average change) for June 6.

9 a.m. ET: Bank of Canada Governor Tiff Macklem speaks to the Chambre de commerce FranceCanada in Paris

9:45 a.m. ET: U.S. S&P Global PMIs for June.

With Reuters and The Canadian Press