Earnings Season Begins as AI Rebound Offsets Geopolitical Caution

Markets are taking a more measured tone this morning as investors assess the latest developments in the Middle East while turning their attention to the start of earnings season. Energy markets and currencies have stabilized overnight after recent volatility, while gold and industrial metals are moving higher as traders weigh the potential for further escalation in US-Iran tensions. At the same time, AI-related stocks are extending their recovery for a second consecutive session, providing support for major equity indices.

Early earnings have delivered a mixed picture, with Levi Strauss exceeding expectations on earnings, revenue and guidance, while PepsiCo came in just below consensus. Levi Strauss reported adjusted EPS of $0.28 versus expectations of $0.24 and raised its full-year EPS guidance to a range of $1.46 to $1.52 from $1.42 to $1.48. PepsiCo reported adjusted EPS of $2.19, narrowly missing the consensus estimate of $2.20.

US futures are mixed ahead of the opening bell. NASDAQ futures are up 0.8%, building on yesterday’s 0.2% gain, while Dow futures are little changed following yesterday’s 1.0% decline.

Overseas markets were mixed overnight. In Asia, Japan’s Nikkei advanced 1.4%, while Hong Kong’s Hang Seng slipped 0.7%. In Europe, Germany’s DAX is up 0.2%, while the UK’s FTSE 100 is down 0.5%.

Commodity markets are showing renewed strength. Crude Oil is up 0.4%, Gasoline is up 0.8% and continues to trade above US$3.10 per gallon, Gold is advancing 1.0%, Copper is up 2.1%, and Silver has gained 1.8%.

Bond yields remain elevated, with the US 10-year Treasury yield holding above 4.55% and the US 30-year Treasury yield remaining above 5.05%. The US Dollar is little changed overall. The euro is up 0.2%, while the Canadian dollar is steady.

Looking ahead, earnings season continues with results due from Aritzia* this afternoon and Delta Air Lines* tomorrow morning. In economic news, Canada’s monthly employment report is scheduled for release Friday morning, with economists expecting the economy to add 10,000 jobs following last month’s gain of 88,000.

*Shares of Aritzia and Delta Air Lines are held in some portfolios managed by SIA Wealth Management.

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