`U.S. futures rose Wednesday ahead of the Federal Reserve’s decision on interest rates with high expectations that they will move higher in what would be the central bank's first hike in more than three years.
Federal Reserve Chair Kevin Warsh, economists say, has largely boxed himself into a rate hike after delivering a high-profile speech last month warning that inflation remains well above the Fed’s 2% target. U.S. data released last week showing that inflation remains stubbornly high bolstered expectations for higher rates, which can slow borrowing and cool costs.
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Michael Pistillo works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)
Michael Gallucchi Traders works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)
A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
Members of media shoot the screens showing the Korea Composite Stock Price Index (KOSPI), the Korean Securities Dealers Automated Quotations (KOSDAQ) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
A dealer walks past the screen showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
The screens showing the foreign exchange rates are displayed at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
That puts Warsh on a collision course with President Donald Trump, who wants the Fed to cut interest rates. Trump lambasted former Fed Chair Jerome Powell over the issue before he nominated Warsh for the job this year.
Futures for the S&P 500 gained 0.2% on Wednesday. Futures for the Dow Jones Industrial Average climbed 0.1% and the Nasdaq rose 0.4%.
Oil prices declined for the first time this week with Saudi Arabia’s crucial oil pipeline closure adding to pressure on global oil supply. Yemen's Iran-backed Houthi rebels have been targeting infrastructure in the kingdom as well as its shipping on the Red Sea, where they have seized several islands on the Bab el-Mandeb Strait. And Iran is still targeting ships in the Strait of Hormuz.
Brent crude, the international standard, fell 1.1% lower to $107.61 a barrel, but is still far above the $70 per barrel before the U.S. and Israel attacked Iran in late February.
Benchmark U.S. crude dropped 2% to $103.70 a barrel.
A gallon of gasoline in the U.S. rose again overnight, hitting $4.37 on average, according to motor club AAA. A week ago, gasoline averaged $4.22 a gallon. Diesel, which topped $6 a gallon on Friday, is now $6.31 a gallon on average, up from $5.94 a week earlier.
Higher U.S. Treasury yields have pressured on the stock market. Government bond yields have risen as the Iran war-driven energy crisis added to inflationary pressure while the U.S. national debt grew.
The 10-year Treasury was at 5% on Wednesday, after it briefly touched 5.04% this week, its highest level in years.
The Commerce Department releases retail sales data for August. In July, Americans unexpectedly cut their spending by the biggest amount in more than a year with retail sales falling 0.6%. Economists are expecting a rebound in August, with analysts surveyed by FactSet projecting a 0.9% increase
In Europe, Britain's FTSE 100 rose 0.6% to 10,723.77. France's CAC 40 climbed 0.4% to 8,123.78, while Germany's DAX gained 0.3% to 25,466.60. Asian markets were higher.
The U.S. dollar rose to 155.19 Japanese yen from 155.10 yen. The euro was trading at $1.1535, down from $1.1544.
Michael Pistillo works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)
Michael Gallucchi Traders works on the floor at the New York Stock Exchange in New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)
A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
Members of media shoot the screens showing the Korea Composite Stock Price Index (KOSPI), the Korean Securities Dealers Automated Quotations (KOSDAQ) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
A dealer walks past the screen showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
The screens showing the foreign exchange rates are displayed at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, Sept. 16, 2026. (AP Photo/Lee Jin-man)
STRASBOURG, France (AP) — European Commission President Ursula von der Leyen on Wednesday proposed making Canada the European Union’s first associate member, a striking overture as U.S. President Donald Trump’s threats drive Ottawa closer to Europe.
Trump’s tariffs and repeated talk of making Canada the 51st state have soured the relationship between the North American neighbors. Canada is seeking to reduce its dependence on the United States, the destination for roughly 70% of its exports, and Prime Minister Mark Carney has called for a “unique alliance” with the EU.
In her annual State of the European Union address, von der Leyen said Canada and the EU would build on their existing free trade agreement, known as CETA, with a broader “Alliance for the Future” aimed at creating “a common prosperity and economic security space.”
She cast that closer relationship as rooted not just in trade but in shared democratic values.
“Above all, dear Mark, Europe and Canada believe in democracy,” von der Leyen said to Carney, who received a standing ovation at the European Parliament in Strasbourg. He is due to address the Parliament on Thursday.
A Canadian official familiar with the discussions told The Associated Press last week that Ottawa was exploring ties with the EU that could stop just short of membership. The official said Canada would seek an arrangement allowing its citizens to live and work in Europe without visas as part of a broader strategic partnership.
Carney’s office welcomed von der Leyen’s proposal, saying Canada was deepening ties with the EU “to strengthen our sovereignty” and supported a move beyond CETA.
Von der Leyen said the expanded partnership would cover advanced manufacturing, technology, defense production, the Arctic, energy, critical minerals, batteries, artificial intelligence, quantum computing, cybersecurity and economic security.
“This is a partnership not against anyone else, but for our common strength,” she said. “In short, we want to bring the relationship with Canada to the highest level possible.”
Because Canada joining the EU as an associate member would be a first, there is no rulebook on how that would work or what it would mean in practice. It is unclear who would need to approve membership, and how long that could take.
Currently, all steps toward EU membership must be approved unanimously by the 27 member countries.
The idea of associate membership has been floated in the past for Ukraine, or for post-Brexit Britain, but no concrete steps have been taken.
The relationship between Canada and the European Union has reached a point where the two sides need to move beyond rhetoric and start building something more substantive, said Tobias Cremer, a German member of the European Parliament.
“Now is the time to stop sending each other love letters and put meat on the bone,” said Cremer, from the center-left Social Democrats.
He argued that any new arrangement should be more ambitious than another trade or defense agreement, describing the goal as a more holistic strategic alliance between Canada and the EU.
Existing frameworks such as CETA could provide a foundation, Cremer said, but should be used more fully and expanded. The case for closer ties, he said, is increasingly being driven by geopolitics as much as economics.
The aim, he said, should ultimately be bigger than a bilateral arrangement — potentially positioning the EU as a convener of middle powers, an idea Carney has also raised.
Canada this year became the first non-European country to join the EU’s 150-billion-euro ($173-billion) SAFE defense program, giving Canadian companies access to joint procurement as Europe seeks to increase its defense readiness.
Iratxe García Pérez, president of the Socialists & Democrats group in the European Parliament, praised Carney for showing “great courage confronting Donald Trump” and said allies were needed to defend “sovereignty, solidarity and international law.”
Carney said Tuesday that economic integration, once viewed largely as an asset, is increasingly “being used as a weapon by certain countries.” Discussions will ramp up at the Canada-EU summit in Montreal in late October, he said.
Canada has retaliated against U.S. tariffs and rejected trade terms Carney says would weaken its sovereignty.
The EU has taken a different course with Washington, reaching a trade agreement that set a 15% U.S. tariff ceiling on the vast majority of EU exports while Europe eliminated tariffs on U.S. industrial goods.
That contrast has loomed over Carney’s push for closer European ties. In a closely watched speech at the World Economic Forum in Davos in January, he urged middle powers to work together to increase their leverage in an era of great-power rivalry.
“When we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what is offered,” Carney said.
“This is not sovereignty,” he said. “It is the performance of sovereignty while accepting subordination.”
Carney’s Davos speech drew a personal rebuke from Trump, and von der Leyen's overture to America’s neighbor could raise the temperature again.
Barry Andrews, chair of the European Parliament’s Development Committee, called Canada “a perfect ally for Europe” and said closer ties could bring particular benefits for Ireland, noting that more than 10% of Canadians claim Irish ancestry.
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Associated Press writer Sam McNeil in Brussels contributed to this report.
European Commission President Ursula von der Leyen delivers a speech with Canada's Prime Minister Mark Carney, right, at the annual State of the European Union at the European Parliament in Strasbourg, eastern France, Wednesday, Sept 16, 2026. (AP Photo/Pascal Bastien)
Canada's Prime Minister Mark Carney, left, and European Commission President Ursula von der Leyen arrive for the annual State of the European Union at the European Parliament in Strasbourg, eastern France, Wednesday, Sept 16, 2026. (AP Photo/Pascal Bastien)
Canada's Prime Minister Mark Carney, right, listens to European Commission President Ursula von der Leyen, during the annual State of the European Union at the European Parliament in Strasbourg, eastern France, Wednesday, Sept 16, 2026. (AP Photo/Pascal Bastien)
