Canada’s main stock index opened lower on Thursday due to losses led by mining stocks, as uninspiring earnings from Wall Street tech giants dampened sentiment, while investors analyzed domestic GDP data.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 103.05 points, or 0.42%, at 24,404.74.

Canada’s gross domestic product was unchanged in August before likely expanding by 0.3% in September, data showed on Thursday, indicating the economy might have missed the central bank’s growth forecast for the third quarter.

The reading for August matched the median forecast of analysts polled by Reuters.

A 1.2% contraction in manufacturing was the biggest drag on the economy in August, Statistics Canada said, adding that retooling and maintenance activities at multiple auto plants contributed to the decline.

Canada’s goods-producing industries, which include the manufacturing sector, fell to its lowest level since December 2021.

Economic growth has slowed in Canada under the impact of high borrowing costs. The Bank of Canada (BoC) has said it wants the economy to strengthen and has cut interest rates four times in a row to spur growth as inflation returned to the bank’s 1-3% control range this year.

Wall Street’s main indexes opened lower on Thursday as warnings from Meta Platforms and Microsoft about rising AI costs sobered some of the buzz around megacap stocks, which have been the market’s primary driver this year.

The Dow Jones Industrial Average fell 185.2 points, or 0.44%, at the open to 41956.34. The S&P 500 fell 38.3 points, or 0.66%, at the open to 5775.34, while the Nasdaq Composite dropped 180.6 points, or 0.97%, to 18427.31 at the opening bell.

Shares of Facebook-owner Meta dipped 2.1% and Microsoft fell 4.6% in early trading, despite both companies beating earnings estimates in results reported after the bell on Wednesday.

Meanwhile, the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation metric, rose 0.2% in September, in-line with economists’ expectation and supporting bets of a gradual easing of monetary policy by the U.S. central bank.

“Investors are pondering results from Microsoft and Meta more than the economic news,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“Still, the inflation news could up the chances the Fed pauses next week. That could be on investors’ mind and cause some more negativity in the medium term.”

Data from the labor department showed the number of Americans filing new applications for unemployment fell to a more than expected 216,000 claims last week as distortions from hurricanes faded. Monthly nonfarm payrolls data is due on Friday.

Meta warned of “significant acceleration” in AI infrastructure investments. Microsoft predicted slower growth in its Azure cloud business, signaling that the company’s already hefty AI investments were not enough to keep pace with capacity constraints.

Although betting on AI-driven tech stocks propelled Wall Street to record highs this year, investor exuberance has meant stocks are trading at incredibly expensive valuations. Meta and Microsoft’s warnings point to the challenges companies face in pleasing investors.

“The market is unforgiving of any AI-related company that fails to significantly outperform,” said Dan Coatsworth, investment analyst at AJ Bell.

“Meta is the latest stock to feel the wrath of investors, despite extending its track record of doing better than analyst forecasts on key financial measures.”

The VIX, Wall Street’s “fear gauge”, rose to a more than three-week high as investors brace for more volatility from corporate results, the upcoming U.S. presidential election and the central bank’s November meeting in the next few weeks.

The benchmark index is set for its sixth straight month of gains in October, and the Nasdaq Composite is set to rise over 2%, though the Dow is on track to decline slightly.

In Europe, the STOXX 600 hit its lowest in seven weeks in a heavy day for earnings, as a drop in shares of French lender BNP Paribas after results and in tech stocks like ASML and SAP offset a bounce in energy and the wider banking sector.

Meanwhile, in the final stretch of the U.S. presidential election contest, opinion polls still put Republican Donald Trump and Democrat Kamala Harris neck-and-neck, although financial markets and some betting platforms have been leaning towards a Trump victory.

The dollar index dipped 0.17% to around 104, just below Tuesday’s near three-month highs. The U.S. currency fell by the most against the yen, down 0.5% to 152.695, still within range of this week’s high of 153.885.

The dollar is set for a rise of nearly 6.5% against the yen in October with political uncertainty in Japan after the coalition government lost its majority in parliamentary elections at the weekend potentially hampering the BOJ’s efforts to normalize monetary policy.

“It supports our forecast for the BoJ to raise rates sooner than current market expectations, although we have pushed back the timing of our forecast for the next rate hike from December to January in light of recent political instability in Japan,” MUFG currency strategist Lee Hardman said.

“One final rate hike this year can’t be completely ruled out if the yen weakens sharply after the U.S. election,” he said.

Gold touched another record high of $2,790.15 an ounce, before retracing a touch to $2,775, while oil rose 0.8% to $73.16 a barrel after weekly data showed an unexpected drop in fuel inventories that offered some reassurance about energy demand.

Reuters