US, Canada trade talks crumble; new Iran sanctions loom

Trade talks between the US and Canada broke down heading into the weekend, with the North American neighbours slapping tariffs on one another and Canadian prime minister Mark Carney saying he was reluctantly retaliating.

Meanwhile, US President Donald Trump’s White House is expected to reveal a new sanction regime on Iran this week, prompting the Islamic Republic to warn Gulf States from joining any effort to further isolate the nation.

Stocks on Wall Street and in Europe closed stronger on Friday as stronger US business activity reinforced optimism about the strength of the world’s biggest economy, with Nvidia’s earnings this week the next test for the artificial intelligence sector amid reports the chipmaker is hiking prices for its servers.

Australian futures are pointing to a positive start to the trading week across the Tasman, with elevated copper prices buoying miners such as Freeport-McMoRan, while Chorus is due to report in New Zealand and local retail sales figures are on the calendar.

Trading places

Canadian prime minister Carney said his nation would apply counter-tariffs on US$20 billion of US products from Sept 8 after trade talks broke down with its neighbour last week with the US imposing import levies of 50% on a range of products from Canada, such as plywood, liquor and electrical equipment.

Carney acknowledged the move would raise costs for Canadians, saying it was done reluctantly, but that his nation was attacked.

That came ahead of what US President Trump described as an “Economic D-Day” coming for Iran as the world’s biggest economy prepares to impose wider sanctions on the Islamic Republic as the Middle East conflict dragged on.

Iran’s security chief Mohsen Rezaei warned neighbouring Gulf States that his nation would try to stop all oil leaving the region if they supported any expanded sanction regime, according to a New York Times report. Brent crude oil futures remained elevated, rising 0.1% to US$93.87 a barrel heading into the weekend.

“Markets remain focused on US efforts to increase pressure on Iran’s economy, including the prospect of measures affecting Tehran and countries that continue to trade with it,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note.

Meanwhile, Nikkei Asia reported Singaporean prime minister Lawrence Wong said the city-state would investigate any efforts by companies trying to avoid US tariffs on goods made using forced labour.

Stocks on Wall Street rallied on Friday, with the S&P 500 and tech-heavy Nasdaq Composite both up 0.4%, and the Dow Jones Industrial Average rising 1%, with Goldman Sachs, Merck & Co and Amgen leading the blue chip index higher.

Strong manufacturing and services gauges reinforced optimism about the health of the US economy, while European measures were unexpectedly upbeat.

The UK’s FTSE 100 and Germany’s DAX both rose 0.6%, while France’s CAC 40 advanced 0.4%.

The chips are down

Meanwhile, Chipmaker Nvidia’s quarterly result on Wednesday in the US is the next hurdle for the AI sector, coming off a dip in investors’ appetite last week.

Greg Boland, market strategy consultant at Moomoo, said Nvidia’s result would shift the focus back to the company’s fundamentals.

“Investors will be watching the Blackwell ramp, data-centre revenue, hyperscaler capital expenditure and forward guidance,” Boland said. “Nvidia's outlook could have implications well beyond the company itself, given its position at the centre of the global AI investment cycle.”

Bloomberg reported the chipmaker told some of its biggest customers that prices of servers with AI chips were going to rise, reflecting increasing costs of memory chips.

Meanwhile, OpenAI said it was cutting prices for developers using its frontier GPT-5.6 Sol model, and Alibaba launched an HK$80 billion share placement to help fund its AI development in the biggest primary follow-on by a Hong Kong-listed firm.

And TikTok and its Chinese parent ByteDance agreed to a US$400 million settlement with the US Department of Justice over claims the social media giant violated children’s online privacy.

The yield on US 10-year treasuries rose 3 basis points to 4.74%, with Treasury secretary Scott Bessent’s intervention calming bond markets for now. New Zealand’s equivalent was at 4.75%, while the kiwi dollar traded at 59.80 US cents at 7am in Auckland from 59.64 cents on Friday.

Federal Reserve chair Kevin Warsh will deliver a keynote speech at the annual central bank symposium at Jackson Hole in Wyoming on Friday.

Australian futures are pointing to a 0.5% gain for the S&P/ASX 200 index when trading opens today, with Ampol and Ansell among companies reporting across the Tasman today.

The Australian Financial Review’s Street Talk column reported SkyCity Entertainment Group could be a takeover target, having hired UBS to review its Adelaide casino.

Moomoo’s Boland said New Zealand’s market would likely open higher today, following Wall Street’s lead.

“The local market begins the week with global equities firmer, but higher US bond yields, elevated oil prices and a stronger New Zealand dollar remain important considerations,” Boland said. “For New Zealand investors, the key question is whether strong corporate earnings can continue to offset pressure from higher global borrowing costs.”

Chorus and dual-listed Ventia Services Group are due to report today, while Statistics New Zealand’s June quarter retail trade survey is also due.

Reporting by Paul McBeth. Image from Jason Hafso on Unsplash.