ClearWater Market Commentary as of December 2nd, 2022

Here is the ClearWater Market Commentary as of December 2nd, 2022:

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

Performance of Principle Indexes: 

S&P/TSX Composite Index  
5 Day0.50%
1 Month5.94%
1 Year-0.72%

As of 2022/12/02 – Source:

Index PerformancesLast 5 DaysYTD
Hang Seng Index10.11%-16.93%
WTI Crude (oil)5.00%6.50%
Shanghai Composite3.53%-11.75%
Russell 20001.92%-16.71%
S&P 5001.10%-14.60%
CAC 400.96%-6.58%
FTSE 1000.93%0.68%
S&P/TSX Composite0.50%-3.47%
Dow Jones Industrial0.20%-5.30%
Nikkei 225-0.65%-5.10%

As of 2022/12/02- Source:

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

US economy (S&P 500 1.10%):

  • The major U.S. equity indexes ended higher, buoyed by the possibility that the Federal Reserve may slow the pace of its interest rate increases.
  • Growth stocks outperformed their value counterparts in the S&P 500 Index, while the technology-heavy Nasdaq Composite Index posted solid gains. The “traditional economy” Dow Jones Industrial Average (DJIA), however, took a bit of a breather and ended modestly higher. Still, the DJIA did enter bull market territory on the final day of November, when it closed more than 20% above the low it hit in September 2022.
  • Comments from Fed Chair Jerome Powell signaling smaller interest rate hikes going forward drove U.S. Treasury yields lower this week. On Friday, however, yields partially retraced their earlier moves after U.S. employment data showed strong hiring and wage inflation in November. 
  • Equities rallied sharply on the final day of November as the market reacted to a speech that Powell gave at the Brookings Institution. In his remarks, Powell highlighted the risk of relaxing monetary policy too soon and reiterated that the peak interest rate for this tightening cycle is likely to be “somewhat higher” than previously estimated. Rates could also remain higher for longer, according to the Fed chair, who also acknowledged that the central bank is mindful that the effects of monetary policy take time to filter through to the economy. In light of this lag, Powell indicated that the Fed could slow the pace of rate increases as early as the Federal Open Market Committee’s mid-December 2022 meeting.
  • The jobs market was an area of focus, with Powell commenting that labor demand would likely need to soften as the central bank seeks to bring inflation under control. Data from the Bureau of Labor Statistics showed that the number of job openings declined by about 353,000 to 10.3 million—a level that was slightly below a consensus estimate for 10.4 million available positions. Nonfarm payrolls data showed that the U.S. economy added 263,000 jobs in November, exceeding a consensus estimate that had called for the pace to slow to about 200,000. The report called out job gains in leisure and hospitality, health care, and government as well as employment declines in retail, transportation, and warehousing. The unemployment rate remained at 3.7%.
  • Consumer spending increased by 0.8%, or 0.5% on an inflation-adjusted basis, sequentially in October. The core personal consumption expenditure price index, which excludes volatile food and energy costs, increased 5.0% year over year, moderating from the 5.2% inflation rate recorded in September. However, the Conference Board’s gauge of consumer confidence slipped in November, with the survey registering an uptick in inflation expectations and increased reticence among households to buy big-ticket items over the next six months.
  • The Institute for Supply Management’s purchasing managers’ index (PMI) for manufacturing slipped to levels corresponding with a contraction in activity for the first time since May 2020, as the uncertain economic environment appeared to weigh on demand.

Canadian markets (S&P/TSX 0.50%):

  • Markets dropped early as the reports showed continued high demand for labour, with the unemployment rate in Canada dipping slightly to 5.1 per cent and holding steady in the U.S.
  • Canadian real GDP (Q3) rose 2.9% (versus 1.5% expected), downshifting from 3.2% in the prior quarter. On a monthly basis, real GDP rose 0.1% m/m in September.
  • Canadian employment (Nov.) grew 10,100 (versus 10,000 expected), following the prior month’s surprise 108,300 gain. The unemployment rate ticked down to 5.1% from 5.2%, mostly due to a decline in the participation rate to 64.8% from 64.9%
  • The Canadian dollar traded for 74.20 cents US compared with 74.44 cents US on Thursday.
  • The January crude oil contract was up 14 cents at US$81.36 per barrel and the January natural gas contract was down 14 cents at US$6.60 per mmBTU.

Performance 2022: S&P 500 Sectors   

Forward P/E Ratios: S&P 400/500/600 Sectors

European and Asian economies:

  • Shares in Europe rose for a seventh week running, as lower inflation spurred hopes that central banks could slow the pace at which they are tightening monetary policy. Signs that China was relaxing some coronavirus restrictions also buoyed sentiment. 
  • Inflation in the eurozone slowed in November for the first time in 17 months. Smaller increases in energy and services costs helped push consumer price growth down more than expected to 10% from a record high of 10.6% in October. Inflation decelerated in 14 of the 19 eurozone member states.
  • The European Commission’s economic sentiment survey provided another sign that consumers and businesses are feeling less gloomy about the economic outlook. Eurozone economic confidence rebounded in November from a two-year low—the first increase since February, when Russia invaded Ukraine. In addition, inflation expectations fell sharply.
  • Central bank policymakers continued to indicate that interest rates are likely to rise further. Prior to the release of the latest data on consumer prices, European Central Bank (ECB) President Christine Lagarde told the European Parliament that inflation in the euro area had not yet peaked and could even accelerate in coming months.
  • Mortgage approvals in the UK fell more than expected in October to the lowest level since the pandemic lockdown in June 2020 as borrowing rates surged, Bank of England (BoE) data showed. In another sign that the housing market may be cooling rapidly, mortgage lender Nationwide’s monthly survey showed that house prices fell in November by 1.4% sequentially—the biggest drop since the lockdown in June 2020. Annual house price growth slowed to 4.4% from 7.2%.
  • Japanese equity market returns were negative for the week, as exporters suffered amid yen strength. Investors’ focus was on COVID-related developments in China, where authorities indicated that a slight easing of strict coronavirus containment measures could be in the cards. Sentiment was also shaped by growing expectations that the U.S. central bank would slow the pace at which it raises interest rates.
  • On the economic data front, Japan’s industrial production fell 2.6% month on month in October. This decline, which was more than expected, stemmed from decreases across the production machinery, electronic parts and devices, and chemicals industries. 
  • Unemployment in October stood at 2.6%, unchanged on the prior month. Declines in the labor force outpaced employment, as both applications and job offers fell. Consumer confidence weakened in November from October, led by a deterioration in the labor market and wage growth.
  • BoJ Board Member Asahi Noguchi said that a near-term exit from ultra-loose monetary policy is unlikely, with more time needed to see wage growth come through to keep inflation around the central bank’s 2% target. He added that the chance of a positive cycle of wages and inflation rising in tandem was now higher than before the coronavirus pandemic and suggested that if trend inflation—focused on wage and service prices—reaches 2%, there could be a shift in the BoJ’s monetary policy stance.
  • Chinese stocks rose amid signs that the Fed would slow the pace of interest rate hikes and that Beijing was moving closer to fully reopening the economy after months of pandemic controls. The blue chip CSI 300 Index climbed 2.5% for the week, logging the best week in a month, Reuters reported.
  • Chinese markets fell early last week following reports of civil unrest in major cities nationwide over the weekend. The unrest began after a fire in Urumqi, the capital of Xinjiang province, killed 10 people, which protestors attributed to coronavirus restrictions.
  • Signs that China was edging away from its zero-tolerance approach to the coronavirus lifted sentiment. China’s National Health Commission announced that it will boost vaccination rates among the elderly, a move seen as crucial for the economy to fully reopen. Days later, China’s most senior official in charge of the coronavirus response, Vice Premier Sun Chunlan, said that efforts to combat the virus were moving to a “new phase” as the omicron variant weakens and more people are vaccinated, state media reported. Beijing also plans to start allowing low-risk infected individuals to isolate from home rather than in government quarantine sites, Bloomberg reported, citing unnamed officials.
  • In economic news, official PMI readings for manufacturing and nonmanufacturing weakened in November. The private Caixin China General Manufacturing PMI rose more than expected to 49.4 from October’s reading. However, the measure remained under 50, indicating contraction as coronavirus outbreaks curtailed manufacturing activity nationwide.

What to watch this week:

  • BoC monetary policy announcement
  • Canadian trade data
  • US ISM Services data
  • China inflation, trade, aggregate yuan financing and money supply data
  • Japanese GDP and trade data
  • European GDP and trade data
  • New Zealand, Brazil and India monetary policy announcements
  • 7 S&P 500 and 5 S&P/TSX companies report earnings

Sources:,, Barron’, and

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