ClearWater Market Commentary as of July 12th, 2021

Here is the ClearWater Market Commentary as of July 12th, 2021:

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 Day	-0.12%
1 Month	0.59%
YTD	16.20%
1 Year	28.92%

^{As of 2021/07/09- Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Shanghai Composite	0.66%	2.44%
Nasdaq	0.43%	14.07%
S&P 500	0.40%	16.30%
Dow Jones Industrial	0.24%	13.93%
DAX	0.17%	14.35%
S&P/TSX Composite	-0.12%	16.20%
Nikkei 225	-0.13%	4.07%
CAC 40	-0.58%	17.62%
Oil ($/bbl)	-0.60%	53.90%
FTSE 100	-0.60%	10.24%
Russell 2000	-1.38%	15.22%
Hang Seng Index	-2.56%	0.70%

^{As of 2021/07/09- Source: www.marketwatch.com}

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

US economy (S&P 500 0.40%):

• The major benchmarks closed mixed, with large-caps and growth stocks outperforming for the second consecutive week.
• Within the S&P 500 Index, the interest rate-sensitive real estate sector performed best as the longer-term Treasury yields decreased sharply.
• Energy stocks fared the worst on concerns that disagreements among major oil producers would result in some violating output restrictions.
• The major driver of the market sentiment last week appeared to be the steep decline in U.S. Treasury yields, hitting a 5-month low on Thursday.
• Equity investors welcomed the decline as falling bond yields typically improve the relative appeal of equities by implying a lower discount on future earnings and more by making corporate dividends more attractive in comparison.
• Falling yields also meant raised concerns for slowing global growth and the global spread of the highly infectious delta variant of the coronavirus also appeared to dim the outlook.
• Overall though, the weeks economic data generally indicated strong growth but did surprise modestly on the downside.

Canadian markets (S&P/TSX -0.12%):

• Lower crude oil prices and a further dip in bond yields hurt two of the bigger sectors on Canada’s main stock index, giving it a slight loss for the week.
• Financials and energy both dropped, while technology, which is powering the US market, was stronger south of the border but down in Canada.
• Increased vaccination rates are helping to propel economic re-openings as more lockdowns are ending. But the rise of COVID-19 variants makes the economy susceptible to a temporary slowdown.
• Last week’s release of the domestic June employment report was encouraging, showing that the Canadian economy bounce back to job growth, adding 230,000 new payrolls in the month.
• After falling sharply between April 2020 and April 2021, the unemployment rates in Canada and have ticked down more slowly in recent months (the domestic rate fell to 7.8% in June), reflecting decent job growth but also a mismatch between the supply and demand for workers. 
• GDP has recovered pandemic losses in record time, with first-half output rising at the fastest clip in 80 years.
• We expect the labour market to regain some momentum in the second half. Back-to-school season, expiring extended unemployment benefits and rising wages should impact the labour shortage.
• The Bank of Canada Q2 Business Outlook Survey Indicator improved 1.2 points to a record high of 4.2. The survey showed inflation and wage expectations climbing, growing capacity pressures and tighter business conditions. Notably, the survey was conducted in the second half of May (earlier stages of the vaccination campaign), which means that the recovery’s full strength may not yet be captured.

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

European and Asian economies:

• Shares in Europe ended little changed, recovering from a sharp pullback stemming from concerns that a surge in coronavirus cases might hobble global economic growth.
• Coronavirus infection rates continued to surge in the UK and across continental Europe, where Spain experienced the worst outbreak.
• The European Central Bank (ECB) adopted a new inflation target of 2% over the medium term. ECB President Christine Lagarde said the new target meant that the central bank would use “especially forceful or persistent monetary policy action” if rates remain close to their lower limit and inflation remains below target.
• Japan’s stock markets registered sharp losses for the week, as sentiment was dampened by concerns that the spread of the delta variant of the coronavirus would stall the global economic recovery.
• Tokyo to be placed under a 4 th state of emergency in an effort to curb a recent rise in infections.
• The Bank of Japan did reiterate the central banks readiness to continue to ease monetary policy further if need be.
• Chinese stocks were mixed for the week, with selling being most pronounced in technology stocks amid heightened regulatory risk on reports that Beijing will tighten oversight of U.S.-listed Chinese companies, as well as the governments crackdown on domestic tech companies.

What to watch this week:

• Canadian and Japanese monetary policy announcements
• Canadian housing data
• US, UK and Eurozone inflation data
• US and Chinese retail sales data
• Eurozone and Chinese trade data
• Chinese GDP and fixed asset investment data
• Global industrial production data
• 23 S&P 500 and 3 S&P/TSX companies report earnings

• 

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

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