Futures to Drop, in Keeping with World Markets

Futures tied to Canada's main stock index fell on Monday, joining the global market rout, as investor confidence in artificial intelligence-linked stocks was shaken by the rising popularity of a Chinese discount AI model.The TSX index collected 34.41 points to end Friday at 25,468.49, making for a weekly gain of 410 points, or 1.64%. The index is up 2.8% for the month.March futures on the S&P/TSX index capsized 0.8% Monday. The Canadian dollar gained 0.11 cents to 69.61 cents U.S. early Monday. Investors will be closely watching interest rate decisions from the Bank of Canada and the U.S. Federal Reserve on Wednesday.The Canadian central bank has reduced rates by a cumulative 1.75 percentage points since June 2024 and is anticipated to cut rates by an additional 25 basis points.Brookfield Asset Management said on Monday it has closed two real-estate investments in Japan worth a combined $1.6 billion.ON BAYSTREET The TSX Venture Exchange tacked on 4.31 points to 621.25 Friday, for a weekly tally of 6.3 points, or more than 1%.ON WALLSTREET Stock futures were down sharply on Monday on concern about an artificial intelligence stock bubble popping because of the emergence of Chinese startup DeepSeek that possibly made a competitive AI model for a fraction of the cost.Futures for the Dow Jones Industrials tumbled 417 points, or 0.9% to 44,185.Futures for the much-broader index fell 141 points, or 2.3%, to 5,992.25.Futures for the tech-heavy NASDAQ plummeted 855.76 points, or 3.9%, to 22,055.50. Last week, DeepSeek released an open source AI model that reportedly outperformed OpenAI’s in several tests. The company had launched an open source large-language model in December for what it says was less than $6 million. While Wall Street questions that figure, the foreign startup is still raising concern that the billions being spent to build out big AI models could be done for much more cheaply.AI darling Nvidia dropped 12% in the premarket, Broadcom lost 13% and AMD shed 6%. Microsoft lost 7%. Palantir was hit for 8%. Other mecacap tech names Amazon and Meta Platforms also shed more than 4% each.Derivative plays from the AI buildout like power providers were also hit big. Constellation Energy lost 14% and Vistra plunged 11%.On top of that, the Federal Reserve will hold its first policy meeting of the year, deciding on the level of interest rates on Wednesday. Fed funds futures are pricing in a more than 99% chance that the central bank leaves interest rates unchanged. In Japan, the Nikkei 225 fell 0.9% Monday, while in Hong Kong, the Hang Seng index forged ahead 0.7%. Oil prices sagged 55 cents to $74.11 U.S. a barrel. Gold prices dropped $8.20 to $2,770.70 U.S. an ounce.