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Futures Slip as Geopolitical Tensions Overshadow Strong Bank Earnings

  US stock futures edged lower as investors balanced upbeat bank earnings against rising geopolitical unease tied to escalating tensions involving Iran. Contracts tied to the Dow, S&P 500, and Nasdaq all traded in the red, signaling a cautious start to the trading day. Major banks delivered solid quarterly results, with strong trading revenue and resilient consumer activity helping lift sentiment in the financial sector. Yet the optimism was tempered by concerns that potential US responses to developments in Iran could inject fresh volatility into global markets. Energy prices climbed as traders braced for possible disruptions. The pullback comes at a moment when investors are already navigating a crowded landscape of economic data, inflation readings, and policy uncertainty. With markets on edge, even strong corporate performance wasn’t enough to counter the broader risk-off mood.
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Canada to Unveil Budget Amid Fiscal Doubts

 

Canadian Finance Minister Chrystia Freeland is set to present the budget on Tuesday, but experts remain skeptical about the government’s fiscal targets. The recent surge in spending plans, particularly in housing, defense, and healthcare, has raised concerns about weakening government finances.

In last year’s Fall Economic Statement (FES), the government aimed to cap the fiscal 2023-24 budget deficit at C$40.1 billion ($29.12 billion), equivalent to about 1.4% of GDP. However, economists estimate that the deficit for the fiscal year ending March 31 could be around C$47 billion, primarily driven by government expenses.

Freeland acknowledges the need for investment in Canada’s current housing affordability crisis, exacerbated by a lack of supply and increased migration. The opposition Conservative Party has criticized the Liberal government for this situation, impacting Prime Minister Justin Trudeau’s popularity.

The upcoming budget, scheduled for presentation to parliament on Tuesday at 4:00 p.m. EDT (2000 GMT), will likely force the government to consider new taxes. However, raising taxes in an inflationary environment could hinder business investments necessary for improving Canada’s productivity.

Despite these challenges, Canada’s sovereign debt remains highly rated globally, providing some stability amidst fiscal uncertainties.

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