Canada’s main stock index is set for further losses Friday after closing sharply lower in the previous session, amid worries over the elevated valuations in the heavily-weighted tech sector. 

Toronto Stock Exchange’s S&P/TSX Composite closed Thursday 1.2%, or 371 points, lower at 29,906.55, with falling stocks outnumbered advancing ones by 713 to 209 and 62 ending unchanged.

Sentiment remains fragile

Sentiment has been hit by U.S. data showing stronger-than-expected job growth for September, meaning investors have further priced out the likelihood of a quarter-point rate cut by the U.S. Federal Reserve next month. 

This overturned the earlier confidence generated by strong third-quarter results and upbeat guidance from Nvidia (NASDAQ:NVDA), the most valuable company in the world and the poster child for the massive growth generated by artificial intelligence spending. 

Worries over the extreme spending on artificial intelligence capabilities, and the associated gains in market capitalization, by a number of tech giants have pressured stock markets across the globe for large parts of this month.

Canadian retail sales due

There are more U.S. economic numbers to digest Friday, in the form of the November manufacturing and services PMI releases, industrial production and housing starts, as well as the closely-followed Michigan consumer sentiment number.

Back in Canada, retail sales are expected to have fallen 0.7% on a monthly basis in September, a significant drop from the 1.0% gains seen the previous month.

This could give the Bank of Canada further reason to emphasize economic slack, after cutting its benchmark overnight rate by 25bps to 2.25% at the end of last month.

Gold prices on track for losing week

Gold prices fell as easing bets on a December interest rate cut by the Federal Reserve buoyed the dollar and weighed on commodity prices across the board. 

Spot gold fell 1% to $4,036.70 an ounce, while gold futures for December fell 0.6% to $4,034.54/oz. 

Spot prices were trading down over 1% this week, reversing a 2% spike from the prior week.

Oil prices also fell Friday, adding to recent losses as traders digested a potential Russia-Ukraine peace deal that could swell global market supply.

Brent futures dropped 2.2% to $61.99 a barrel, and U.S. West Texas Intermediate crude futures fell 2.5% to $57.49 a barrel.

Both contracts are on track to post weekly losses of around 4%, erasing most of last week’s gains.

Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, which, if accepted, would remove much of the war’s geopolitical risk premium baked into crude.