ClearWater Market Commentary as of August 3, 2021

Here is the ClearWater Market Commentary as of August 3, 2021:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

^{As of 2021/07/30- Source: www.marketwatch.com}

^{As of 2021/07/30- Source: www.marketwatch.com}

Last week’s and next week’s key economic events:

US economy (S&P 500 -0.61%):

• The major indexes were mixed for the week. The large-cap benchmarks and the technology-focused Nasdaq Composite index manage record highs before pulling back Friday to end the week with modest losses.
• Recently underperforming utilities shares reversed course and were amount the best performers in the S&P 500.
• A decline in Amazon.com shares weighed on the consumer discretionary sector following news Thursday that the online retailer missed consensus second- quarter revenue expectations.
• While earnings reports drove large moves in the market, investors appeared to keep a close eye on macroeconomic concerns, mostly in and around the spread of the delta variant of the coronavirus.
• There was several high-profile economic data points during the week as well, many of which indicated strong growth but surprised on the downside. All point to a rebound in growth, but just not as much as expected.

Canadian markets (S&P/TSX 0.61%):

• Canadian equities were amongst the better performers, especially small caps.
• Canadian inflation surprised with weaker than expected prints, leaving breathing room for central banks and bolstering the ‘inflation will be transitory’ argument.
• Domestic GDP declined 0.3% in May, logging the second monthly drop as a result of renewed restrictions due to COVID-19.
• On a more positive note, Statistics Canada estimates that the economy rebounded strongly enough in the last month of the quarter, growing 0.7% in June.
• Economic activity in the second quarter is now projected to grow at a 2.5% annualized rate, exceeding the Bank of Canada’s estimate of 2%. This would still leave GDP slightly below its pre-pandemic peak, but that won’t likely last long as the economy bounces back with vigor over the coming months.

Performance 2021: S&P 500/400/600 Sectors

European and Asian economies:

• Shares in Europe were little changed. Optimism engendered by strong corporate earnings was offset by concerns about the spread of the delta variant of the coronavirus and volatility spurred by Chinese regulators cracking down on domestic technology and education companies.
• On a positive note, the UK will begin lifting travel bans as of August 2nd and will permit most travelers who have been fully vaccinated in the U.S. and Europe to enter.
• The Eurozone saw positive GDP data indicating growth higher than forecasted, although inflation has also picked up. The Eurozone has bounced back from recession in the second quarter, with a year-over-year growth rate of 13.7%.
• Euro inflation did accelerate to 2.2% in July from 1.9% in June, lifted by higher energy prices. However, excluding food and fuel prices, the inflation rate held steady at 0.9%.
• Japan’s major stock benchmarks faced headwinds as COVID-19 cases in the country reached a record level and the government extended a state of emergency.
• Mainland Chinese stocks slumped after a regulatory overhaul of the for-profit education sector unveiled July 24th proved to be much tougher than investors had expected, and fears of heightened government oversight spilled into Chinese technology, health care, and property stocks.
• However, toward the end of the week stock markets stabilized as regulatory concerns appeared to ease, albeit without a relief rally.

What to watch this week:

• Canadian and US trade and employment data
• Eurozone retail sales and inflation data
• Japanese consumer confidence data
• Chinese trade data
• Global Purchasing Manager Indices
• 150 S&P 500 and 79 S&P/TSX companies report earnings

Sources: Bloomberg.com,Yardeni.com, Barron’s.com, Factset.com and Newyorkfed.org

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