Morning Markets for Thursday, April 2, 2026

Key Concepts

• Geopolitical Conflict: Ongoing U.S.-led military campaign in Iran, impacting global oil prices and market stability.
• Market Volatility: Significant fluctuations in U.S. and Canadian markets driven by war uncertainty and inflation fears.
• Trade Irritants: Tensions between Canada and the U.S. regarding "Buy Canadian" policies, supply management, and trade protectionism.
• Direct-to-Device (D2D) Satellite Connectivity: The race between Amazon (Project Kuiper/LEO) and SpaceX (Starlink) to secure spectrum for satellite internet.
• Excise Tax: The Canadian federal government's alcohol excise tax, which is currently subject to a 2% annual cap, criticized by industry leaders as a burden on an already struggling sector.

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1. Market Overview and Economic Indicators

• Market Performance: Despite initial fears following President Trump’s address, the TSX showed resilience, trading in the green. U.S. markets (S&P 500) experienced early losses but showed signs of a rebound on low volume.
• Canadian Economic Data: Statistics Canada reported a trade deficit of $5.7 billion in February, the largest since August, driven by record-high imports of gold and a 45% surge in metal/mineral product imports.
• Growth Forecasts: Deloitte slashed Canada’s 2024 real GDP growth forecast by 20%, predicting a modest 1.2% expansion due to energy price volatility and a soft labor market.

2. The Conflict in Iran and Global Energy

• President Trump’s Address: Trump described the military campaign as "unstoppable" but provided no clear timeline for resolution. He threatened to strike Iran’s electric generating plants if a deal is not reached.
• Market Impact: The uncertainty regarding the conflict's duration is keeping oil prices elevated. Analysts note that energy was the only sector in the U.S. market to perform well in March.
• NATO Tensions: Trump criticized NATO as a "paper tiger" for failing to support the U.S. campaign, leading to questions about the viability of a unilateral U.S. withdrawal from the alliance.

3. Corporate Developments and Sector Analysis

• Sigma Lithium: Shares surged 20% following a $100 million collateralized bank guarantee and a $50 million customer prepayment, easing liquidity concerns. Bank of America upgraded the stock to "Buy."
• Chevron & AI: Chevron secured a deal with Microsoft to power AI data centers using natural gas. Analysts view Chevron as a primary beneficiary of rising gas demand.
• Vale: Upgraded by Bank of America; the company is leveraging long-term freight contracts to offset rising diesel and fuel costs caused by the Middle East conflict.
• Airlines: American Airlines faced downward pressure due to high leverage to fuel costs, with analysts noting that a resolution to the war is necessary for a share price rally.
• Telecoms: BCE, Rogers, and Telus saw pressure following a downgrade by TD Cowen, which noted that recent stock strength was merely a "flight to safety" rather than fundamental growth.

4. Canada-U.S. Trade Relations

• Trade Irritants: The U.S. has flagged Canada’s "Buy Canadian" infrastructure provisions, the Online Streaming Act, and supply management (dairy/poultry/eggs) as trade irritants.
• Diplomatic Strategy: Canada is currently engaging in high-level talks in Washington to manage these irritants. Meanwhile, a Canadian delegation led by Finance Minister François-Philippe Champagne is in China to explore financial and healthcare opportunities, signaling a potential diplomatic pivot.

5. Satellite Internet: The Amazon-Globalstar Play

• Strategic Acquisition: Amazon is in talks to acquire Globalstar to bolster its satellite internet ambitions and compete with SpaceX’s Starlink.
• Spectrum Value: Analysts emphasize that spectrum is a "non-depreciating asset." Globalstar’s terrestrial spectrum is particularly valuable for Amazon’s logistics and warehouse automation.
• The Apple Hurdle: Globalstar’s existing partnership with Apple (where Apple funds 95% of CAPEX in exchange for 85% of capacity) complicates a potential acquisition.

6. Alcohol Excise Tax Debate

• Industry Stance: Richard Alexander, President of Beer Canada, argues that the 2% annual excise tax increase is unsustainable. He cites an 18% decline in beer sales and significant cost increases (e.g., 60% rise in aluminum costs due to tariffs) as reasons to repeal the tax.
• Call to Action: The industry is calling for a full debate in the House of Commons rather than automatic inflationary adjustments, noting that the tax is hurting Canadian farmers and small businesses.

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Synthesis/Conclusion

The current economic landscape is defined by a "wait-and-see" approach regarding the conflict in Iran, which continues to dictate energy prices and market sentiment. While Canadian markets have shown surprising resilience, the underlying pressures—ranging from trade protectionism with the U.S. to domestic tax burdens on the brewing industry—suggest a period of continued volatility. Strategic corporate moves, such as Amazon’s interest in Globalstar and Chevron’s pivot to AI-driven energy demand, highlight how companies are attempting to hedge against geopolitical uncertainty by securing critical infrastructure and resources.