Most equity markets lost ground this week. The enthusiasm that pushed stocks higher in the wake of the U.S. election eased leading up to Donald Trump’s inauguration as president on Friday.
In the absence of concrete details about Trump’s policies, investors have taken a wait-and-see stance in recent weeks. This is in stark contrast to the rally sparked by hopes that the new administration would boost the U.S. economy through increased government spending, tax cuts and deregulation.
Canada was one of the few global markets to buck the downward trend as the S&P/TSX Composite posted a modest advance. Among key sectors, materials stocks gained as gold and base metals prices rose. The energy sector was down marginally on volatile oil prices. The financials sector was little changed, while select industrial stocks benefitted from corporate developments.
Wall Street’s S&P 500 Composite fell slightly in a holiday-shortened trading week. The consumer and industrials sectors outperformed, while the financials sector – which has been a big winner since the election – declined despite continued healthy quarterly profits reported by banks this week, and as Federal Reserve Chair Janet Yellen indicated that the central bank was on track for a series of gradual interest rate increases over the next few years. Rate hikes are generally seen as positive for bank earnings.
The pan-European STOXX Europe 600 Index fell. Britain’s FTSE 100 ended the longest record-setting streak in its history as the country’s government outlined Brexit plans. Other European markets were hesitant as investors digested Brexit developments and awaited U.S. economic policy.
North American economic developments were generally favourable. The Bank of Canada left interest rates unchanged at its policy-setting meeting this week, but indicated that a rate cut remains possible if the economy is hurt by potential U.S. protectionist policies. The bank cut its key rate twice in 2015, but has since made no changes. Canadian manufacturing sales jumped by a greater-than-expected 1.5% in November over October and retail sales rose 0.2%. In the U.S., the Fed’s Beige Book report indicated the economy continues to expand at a modest pace.
Level | Change | 1-week | YTD | 1-year | 5-year | |
EQUITY INDICES | CAD | CAD | CAD | CAD | ||
---|---|---|---|---|---|---|
S&P/TSX | 15,547.88 | + 50.60 | + 0.33% | + 1.70% | + 31.28% | + 4.63% |
S&P 500 | 2,271.31 | - 3.33 | + 1.59% | + 0.73% | + 11.91% | + 17.87% |
DJIA | 19,827.25 | - 58.48 | + 1.44% | - 0.39% | + 15.20% | + 15.48% |
FTSE 100 | 7,198.44 | - 139.37 | + 0.89% | - 0.01% | + 1.10% | + 5.61% |
CAC 40 | 4,850.67 | - 71.82 | + 0.61% | + 0.25% | + 5.28% | + 9.69% |
DAX | 11,630.13 | + 0.95 | + 2.11% | + 1.80% | + 10.87% | + 14.58% |
Nikkei | 19,137.91 | - 149.37 | + 0.84% | + 0.92% | + 8.28% | + 14.02% |
Hang Seng | 22,885.91 | - 51.47 | + 1.45% | + 3.22% | + 11.99% | + 8.44% |
CURRENCY RETURNS | CAD | Change | ||||
US$ | 1.3326 | + 0.0212 | + 1.62% | - 0.86% | - 8.12% | + 5.63% |
Euro | 1.4248 | + 0.0291 | + 2.08% | + 0.81% | - 9.79% | + 1.69% |
Yen | 0.0116 | + 0.0002 | + 1.54% | + 1.23% | - 6.23% | - 2.43% |
CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change | |
3-month | 0.44 | - 0.02 | Oil | $52.42 | + $0.05 | |
5-year | 1.13 | + 0.02 | Gold | $1,207.60 | + $10.02 | |
10-year | 1.75 | + 0.03 | Natural Gas | $3.21 | - $0.15 |
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