Trade Tensions Escalate Between US and Canada; Geopolitical Concerns Persist; Equities Close Higher, Gold Jumps

Lead Trade relations between the US and Canada deteriorated sharply over the weekend, with President Trump imposing 50% tariffs on approximately $20 billion of Canadian goods, prompting immediate dollar-for-dollar retaliation from Canada. Geopolitical tensions remain high with ongoing Strait of Hormuz navigation issues and renewed Israeli warnings to Hamas. US equities closed higher, with the Dow ETF up 0.89% and the S&P 500 ETF up 0.38%. Gold futures surged 2.39%. Session narrative The weekend was dominated by escalating trade disputes between the US and Canada. President Trump implemented 50% tariffs on Canadian goods, leading to swift retaliatory tariffs from Canada, set to begin September 8. This followed a collapse in trade negotiations where both sides accused the other of changing previously agreed terms. Geopolitically, the Strait of Hormuz continues to be a flashpoint, with Iran authorizing some Iraqi tankers to transit while overall shipping remains severely restricted. Oman and Iran foreign ministers discussed conditions for resuming negotiations aimed at restoring navigation through the Strait. Israel issued warnings to Hamas regarding drone and kite launches from Gaza, threatening escalated strikes and announcing plans to order evacuations from launch zones. Ukraine reported hitting a Russian oil refinery in Perm and the Marinovka military air base in the Volgograd region. A U.S. Navy P-8A Poseidon flew through the Taiwan Strait. In corporate news, Nvidia announced a $6 billion deal to license Poolside's AI technology and an additional $1 billion investment. Anthropic is reportedly in IPO talks targeting over $100 billion, potentially valuing the company at $2 trillion. Markets reacted with US equities closing higher, led by the Dow ETF gaining 0.89% and the Russell 2000 ETF up 0.76%, while the S&P 500 ETF rose 0.38%. The VIX fell 5.50%. Gold saw a significant rally, jumping 2.39%, while silver was up 2.09%. WTI crude rose 0.26% and Brent crude gained 0.65%. The US 10-year yield increased 0.89%, while long-duration Treasuries fell 0.36%. The US Dollar Index was up 0.04%. Cross-asset check US equities closed higher, with the Dow ETF up 0.89% to 532.19, the S&P 500 ETF up 0.38% to 765.55, and the Nasdaq 100 ETF up 0.31% to 713.14. The Russell 2000 ETF gained 0.76% to 299.95. Volatility, as measured by the VIX, decreased 5.50% to 15.13. In fixed income, the US 10-year yield rose 0.89% to 4.74%, while long-duration Treasuries (TLT) fell 0.36% to 82.05. The US Dollar Index (DXY) saw a slight increase of 0.04% to 98.84. Commodities were broadly higher, with Gold surging 2.39% to 4680.6 and Silver up 2.09% to 69.53. WTI crude gained 0.26% to 87.06/bbl, and Brent crude rose 0.65% to 94.39/bbl. Copper was up 1.82% and Natural Gas gained 1.85%. Themes & continuing stories The primary theme is the escalating trade conflict between the US and Canada, with both nations imposing significant tariffs. Geopolitical tensions remain a key focus, particularly in the Middle East concerning the Strait of Hormuz and the Israel-Gaza situation. The AI sector continues to generate significant corporate news, highlighted by Nvidia's major deal and Anthropic's IPO discussions. What’s ahead Market participants will be watching for further developments in the US-Canada trade dispute, particularly as Canadian retaliatory tariffs are set to take effect on September 8. Geopolitical updates from the Middle East and Ukraine will also remain in focus.