TSX Futures Slip as Middle East Fears and AI Spending Surge Rattle Investors

TSX Futures Slide as Oil and Gold Diverge, U.S. Tech Rout Spreads

S&P/TSX 60 futures fell 8 points, or 0.4%, early Thursday, reversing from the prior session’s record high that rode broad strength in energy and metals. The decline came as oil prices rose on geopolitical alarm but gold failed to keep pace, and a wave of jitters from U.S. technology shares spilled into the Canadian market.

Across the border, Dow futures shed 289 points, the S&P 500 lost 42 points, and Nasdaq 100 futures dropped 228 points. Alphabet was a focal point after it raised its full-year capital expenditure forecast to as much as $205 billion, up from $190 billion, to fund AI infrastructure. Investors saw the climb as a warning that even a $4 trillion firm could face deeper free-cash-flow deficits. Tesla also slid pre-market, weighed down by its own cash-flow-negative pivot into AI and robotics.

In the Middle East, Iran-backed Houthi rebels claimed responsibility for striking two Saudi oil tankers in the Red Sea, the first such action since declaring a blockade on Saudi vessels. The escalation revived fears of a wider disruption to Persian Gulf crude shipments, keeping a supply-risk premium firmly in energy markets.

Canadian corporate news thinned the market’s focus. Trucking firm Mullen Group and mining heavyweight Teck Resources both reported second-quarter earnings that beat expectations, while Winpak, First Service Corp, and A&W Food Services of Canada were due to report later in the day. In the U.S., Intel, RTX, Lockheed Martin, Freeport-McMoRan, and Newmont were all on the earnings docket, alongside pre-market moves in copper and gold equities.

Where AI Capex and Red Sea Tensions Are Fragmenting Market Sentiment

The AI Capex Cliff and Tech Stock Pressure

Alphabet’s guidance hike to $205 billion in capital spending crystallized a worry that has been brewing since hyperscalers began their AI arms race: the infrastructure build-out is fast outpacing revenue returns. For a company already navigating a more competitive search business, the prospect of deeper free-cash-flow erosion is weighing disproportionately on valuations. Tesla’s simultaneous cash-flow squeeze, tied to its own AI pivot, reinforces the narrative that even high-margin tech firms are being forced into a spending cycle that may not pay off for years, making earnings season a stress test for the entire sector.

Commodities Tug-of-War: Oil Wins, Gold Falters

Oil prices moved higher on the Houthi tanker attack, as any disruption to Red Sea shipping lanes adds risk premiums for crude. Yet gold did not get a parallel safety bid, instead staying flat or slightly lower. That divergence signals that markets are not treating the event as a broad flight to safety, but rather as a targeted supply shock. For the TSX, this mix matters: energy stocks could benefit from higher oil, but gold miners—which had fueled the previous day’s record—may stall if the yellow metal loses its dual appeal as both an inflation hedge and geopolitical haven.

Middle East Flashpoint and the Red Sea Threat

The Houthi claim of hitting Saudi tankers directly challenges the Saudi-led coalition’s control of the Bab el-Mandeb strait, a chokepoint for roughly 4 million barrels per day of crude and petroleum products. While the market has absorbed such threats before, the official declaration of a blockade against Saudi vessels adds a new layer of uncertainty. A sustained disruption would lift mid-term crude prices and could spill over into higher marine insurance costs, which in turn would hit shipping and airline stocks—both present in the TSX via companies like Mullen Group.

Earnings Spotlight: From Copper to Chips

On the day’s reporting front, Teck Resources’ beat underscores that copper miners are already enjoying strong demand from electrification and grid spending, which may be amplified by the very AI buildouts pressuring tech. In the U.S., Intel’s report is a bellwether: improved earnings on AI tailwinds would validate its turnaround thesis, but the market’s real question is whether 2026 guidance shows a credible path to narrowing the gap with rivals. Defense results from Raytheon and Lockheed Martin could get an extra lift from renewed global security tensions, while Freeport-McMoRan and Newmont will test whether copper and gold can both rally in a world of rising geopolitical risk and heavy capital spending.

What Investors Should Track as Intel, Defense Titans, and Miners Report

For cross-market investors:

• Watch Intel’s post-market report not just for quarterly beats, but for concrete signs that its new advanced-chip platform can accelerate AI revenue in 2026, which could be a catalyst for the whole semiconductor sector after recent tech weakness.
• The Houthi-Saudi tanker escalation is the most concrete Red Sea threat in weeks. Any follow-on disruption to Bab el-Mandeb traffic would likely send oil above the day’s gains, favouring Canadian energy names but potentially hurting shipping and airline stocks in both U.S. and Canadian markets.
• Alphabet’s capex revision resets the bar for AI infrastructure spending. Investors should track commentary from other large-cap tech firms this earnings season for similar hikes; an industry-wide surge in spending would deepen the free-cash-flow debate and could turn sector rotation toward commodities further.
• Defense earnings from RTX and Lockheed Martin may gain from the heightened Middle East tension narrative. If order backlogs rise or forward guidance cites increased geopolitical demand, the stocks could offer near-term upside independent of the broader tech sell-off.