This week in the markets

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Equity markets still watching outcome of potential tariff increases

March 16, 2018

Equity markets were mixed on a week of positive inflation data, offset by a number of personnel changes within U.S. President Donald Trump’s inner circle. Of interest this week was the release of February U.S. inflation data, which was up 2.2% YOY. The data was initially positively viewed by equity markets as it illustrated that inflation was gradually picking up without any acceleration, and that a more aggressive pace of rate hikes by the U.S. Federal Reserve would not be necessary. 

Despite the optimism, equity markets retreated on Tuesday after the announcement that the U.S. Secretary of State, Rex Tillerson (who was highly regarded by investors), would be replaced by Mike Pompeo, the current director of the CIA. Other personnel changes included the announcement of Larry Kudlow as director of the National Economic Council, who would be replacing Gary Cohn who resigned last week in an apparent disagreement over tariffs. Tariffs continued to make headlines this week, as the U.S. is looking at implementing a wider tariff package than originally expected with China.

Canadian stocks traded marginally higher through the week. Bank of Nova Scotia led advancers on continued investor interest after their report of positive quarterly results a few weeks ago. Magna International also rallied as the company announced a new $200 million investment in Lyft and plans to work with the ride-sharing firm to co-develop self-driving cars. On the flipside, Nutrien shares underperformed as investors took profits after three strong weeks of gains. Element Fleet Management Corp., a leasing company, underperformed over funding concerns at one of its partners. 

U.S. equity indices traded lower on the week along with bond yields. Within the S&P 500, financial and material sectors underperformed, whereas defensive sectors such as health care and utilities outperformed. On the positive side, Micron Technology and Allergan led advancers. Micron rallied after a number of research analysts increased target prices stemming from stronger-than-expected sales trends. Allergan outperformed on comments from management highlighting a new urgency to find ways to unlock shareholder value. Boeing and several of the large money center banks led decliners over increased concerns regarding a potential trade war between the U.S. and China.

Both Japanese and European equities were up on the week. The Japanese Yen strengthened on the week as concern over a land sale deal surrounding Prime Minister Abe spurred the buying of “safe-haven” assets. In Europe, footwear maker Adidas reported positive earnings on the back of strong North American and Chinese sales. On the negative side, retailer H&M reported earnings which missed analyst estimates as winter garment sales were less than expected.

What’s ahead next week:


  • Wholesale trade sales (January)
  • Consumer Price Index (February)
  • Retail sales (January)


  • Federal Reserve interest rate decision
  • New and existing home sales (February)
  • Markit manufacturing and services purchasing managers indices (March – preliminary)
  • Durable goods orders (February – preliminary)
  • Conference Board Leading Economic Index (February)

This weeks market closing values

EQUITY INDICES Level Change (%) 1-week YTD 1-year 5-year
      CAD$ CAD$ CAD$ CAD$
S&P/TSX 15,711.33 133.52 0.86% -3.07% 0.96% 4.14%
S&P 500 2,752.01 -34.56 0.66% 7.57% 13.51% 17.76%
DJIA 24,946.51 -389.23 0.36% 5.47% 17.05% 17.16%
FTSE 100 7,164.14 -60.37 1.70% 0.37% 7.07% 5.51%
CAC 40 5,282.75 8.35 1.84% 6.23% 18.70% 10.69%
DAX 12,389.58 42.9 2.04% 2.46% 15.51% 13.24%
Nikkei 21,676.51 207.31 3.62% 5.60% 16.09% 14.82%
Hang Seng 31,501.97 505.76 3.52% 9.62% 26.08% 12.19%
CURRENCY RETURNS CAD Change 1-week Yth 1-year 5-year
US$ 1.3094 0.0282 2.20% 4.16% -1.69% 5.13%
Euro 1.6088 0.0322 2.04% 6.63% 12.20% 3.83%
Yen 0.0123 0.0004 2.97% 10.69% 5.06% 2.91%
3-month 1.06 -0.03 Oil $62.21 $0.17
5-year 1.98 -0.1 Gold $1,313.82 -$9.48
10-year 2.14 -0.13 Natural Gas $2.70 -$0.01