This week in the markets


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TSX stocks climb to record high

November 15, 2019  

Stock indices in both Canada and the U.S. touched new record highs this week as a lack of substantial developments on the political and trade fronts allowed investors to focus on mildly better than expected economic data. Third quarter corporate earnings reporting season wound down, also with generally better than expected results. Negotiations continued between China and the U.S. over their tentative phase one trade deal, with targets for agricultural imports and possible tariff rollbacks emerging as sticking points. A Wednesday “deadline” for a decision about threatened tariffs on European autos came and went without any announcement and impeachment investigation proceedings moved into the public spotlight. U.S. Federal Reserve Chair Jerome Powell told lawmakers he saw little need for further interest rate cuts, but tame inflation readings suggested the recent cuts will not be undone any time soon. With that benign outlook, government bond yields slipped lower.

Gains in Canada’s S&P/TSX Composite Index were led by the technology sector. Shares of e-commerce platform company Shopify Inc., which comprises over one third of the sector’s index weight, surged as it shook off the previous week’s decline that was triggered by a sell recommendation on an investing website. Higher gold prices lifted the materials sector, and the interest rate-sensitive utilities, real estate, and communications services sectors advanced as bond yields fell. The health care sector dropped sharply as cannabis stocks came under pressure following weak earnings reports, especially from sector leader Canopy Growth Corp.  

Falling interest rates made the interest rate-sensitive “bond proxy” groups – utilities, real estate – among the best sector performers in the S&P 500. Conversely, the financials sector, where lower rates tend to hurt profitability, put in one of the worst showings. The energy sector also fell. In U.S. economic releases, both the Consumer and Producer Price Indices were reported below expectations, lowering the year-over-year rates for both, in spite of recent tariff hikes. Small business optimism, as measured by the National Federation of Independent Business, improved.

Most major European markets were up slightly as economic news, including Euro Area industrial production and Germany’s ZEW sentiment survey, improved. German third quarter real Gross Domestic Product also surprisingly rose, averting a technical recession. While investors were left waiting for news about tariffs on European autos – widely expected to be delayed for several months – U.S. President Donald Trump criticized the European Union for trade barriers that may be “worse than China”. Stocks in Spain were especially weak after the far-right VOX party made more big electoral gains. In Asia, equities in Japan and China dropped on poor economic data, and Hong Kong stocks fell as continuing pro-democracy protests turned increasingly violent and pushed the territory’s economy into recession.

 

What’s ahead next week:

Canada

  • Manufacturing sales (September)
  • Consumer Price Index (October)
  • Retail sales (September)

U.S.

  • Housing starts, Building permits (October)
  • Existing home sales (October)
  • Conference Board Leading Index (October)
  • Markit Purchasing Managers Indices (November)
  • Univ. of Michigan Sentiment Index (November)

This weeks market closing values

EQUITY INDICES Level Change 1-week YTD 1-year 5-year
      CAD CAD CAD CAD
S&P/TSX 17,028.47 + 151.05 + 0.89% + 18.89% + 12.44% + 2.79%
S&P 500 3,120.46 + 27.38 + 0.92% + 20.87% + 14.52% + 12.38%
DJIA 28,004.89 + 323.65 + 1.20% + 16.57% + 10.96% + 13.22%
FTSE 100 7,302.94 - 56.44 + 0.33% + 6.74% + 5.29% + 1.17%
CAC 40 5,939.27 + 49.57 + 1.18% + 17.67% + 15.50% + 7.90%
DAX 13,241.75 + 13.19 + 0.44% + 17.54% + 14.16% + 8.17%
Nikkei 23,303.32 - 88.55 + 0.03% + 14.64% + 11.60% + 10.79%
Hang Seng 26,326.66 - 1,324.48 - 4.77% - 1.02% + 1.11% + 4.88%
CURRENCY RETURNS CAD Change 1-week YTD 1-year 5-year
US$ 1.3227 - 0.0001 - 0.01% - 3.01% + 0.37% + 3.22%
Euro 1.4620 + 0.0046 + 0.32% - 6.50% - 2.06% + 0.67%
Yen 0.0122 + 0.0001 + 0.42% - 2.25% + 4.85% + 4.60%
CANADIAN TREASURIES Yield Change COMMODITIES USD Change
3-month 1.66 - 0.02 Oil $57.79 + $0.55
5-year 1.49 - 0.07 Gold $1,466.91 + $7.99
10-year 1.49 - 0.10 Natural Gas $2.68 - $0.19