Canadian National Railway and Canadian Pacific Kansas City have locked out approximately 10,000 unionised workers in an unprecedented concurrent work stoppage that has halted most rail freight operations in Canada. It's expected to have far-reaching effects on North American supply chains, potentially costing over C$341 million per day, according to Moody's, affecting various sectors, including agriculture, mining, and manufacturing, with about a third of the traffic crossing the U.S.-Canada border. While the rail networks south of the border will continue to operate, the incident threatens to cripple shipments of essential commodities like grain, potash, and petroleum products. The alternative, trucking industry, which faces surging demand and rising freight rates, lacks the capacity to fully replace rail distribution, posing a significant risk to both the Canadian and U.S. economies.

EQUITY

The U.S. stock market saw minimal gains on Wednesday, powered by investor reactions to the minutes from the Federal Reserve's July meeting, which suggested a likely interest rate cut in September if economic data aligns with expectations. Sectors such as consumer discretionary and materials led the charge, while financials and energy lagged behind. Retailer Target Inc. was up 10%, and equipment manufacturer Keysight Tech gained 14% on better earnings and raised guidance.

GOLD

Gold prices are on slight declines but continue to hold near record highs, guided by a weaker U.S. dollar. Analysts at MUFG suggest that the dollar's weakness stems from rate cuts, with Fed Chair Jerome Powell's upcoming Jackson Hole symposium speech in scope. The weaker dollar has boosted gold, traditionally seen as a hedge in times of low interest rates, with some forecasts suggesting prices could rise to $2,750 per ounce by the end of the year.

OIL
The global oil market is facing a bearish outlook on prices, with analysts at Piper Sandler highlighting continued weak demand, particularly from China, where industrial activity and transportation demand fell off. OPEC and its allies are struggling to stabilise prices, with concerns that they may need to implement further production cuts. However, next week's inventories report could mitigate the loss as the incident in Canada encourages increased fuel consumption.

CURRENCY

The dollar's decline continued, albeit slower now that investors are looking forward to Fed Chair Powell's speech and flash PMIs, with the euro and sterling reaching their highest levels since July 2023. Meanwhile, the Japanese yen also weakened slightly following the Bank of Japan's recent interest rate hike, though further increases in rates can be expected by year-end.