ClearWater Market Commentary as of July 19, 2021

Here is the ClearWater Market Commentary as of July 19, 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	-1.22%
1 Month	-0.07%
YTD	16.20%
1 Year	23.95%

^{As of 2021/07/16- Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Hang Seng Index	-0.02%	1.02%
Shanghai Composite	-0.55%	1.59%
Dow Jones Industrial	-0.88%	13.33%
S&P/TSX Composite	-1.22%	16.20%
S&P 500	-1.31%	15.20%
CAC 40	-1.51%	16.37%
DAX	-1.58%	13.28%
FTSE 100	-1.65%	8.48%
Nasdaq	-2.08%	11.94%
Nikkei 225	-3.30%	0.66%
Oil ($/bbl)	-4.10%	47.40%
Russell 2000	-5.30%	9.43%

^{As of 2021/07/16- Source: www.marketwatch.com}

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

US economy (S&P 500 -1.31%):

• The major indexes finished lower, but the S&P 500 Index and the Nasdaq did reach new intraday highs at midweek before falling back.
• The small-cap Russell 2000 index underperformed for the third consecutive week, further surrendering its leadership over the large-cap S&P 500 index for the year.
• Growth and inflation data appeared to remain in the spotlight during the week. Stocks fell back on Tuesday, following the release of data showing that headline and core (excluding food and energy) consumer prices had jumped 0.9% in June, roughly twice consensus estimates.
• It’s been the fastest 12-month increase in the core rate (4.5%) since 1991. Surging used-car prices were responsible for approximately one third of the increase surprisingly.
• Fed Chair Jerome Powell did acknowledge that the recent spike in inflation was larger than expected, he repeated his view that inflation pressures are temporary and “substantial further progress is still a ways off” in terms of the Fed’s employment and inflation goals.
• Before raising short-term interest rates, the Fed is widely expected to being tapering asset purchases designed to keep downward pressure on long-term rates.
• Overall, the week’s economic data was mixed relative to expectations with manufacturing contracting slightly in June, but with weekly jobless claims hitting a new pandemic low of 360,000.

Canadian markets (S&P/TSX -1.22%):

• Canadian markets tumbled last week as worries grow over a surge in global cases of the Delta variant.
• Beneath the relatively flat market were big defensive moves toward pipelines, precious metals like gold and other safety assets, along with large cap stocks.
• Crude oil prices slipped after Saudi Arabia reached a compromise with the United Arab Emirates on a deal for OPEC to add more output.
• RBC reported that there is evidence of a potential squeeze in the labor market as a wave of Canadians are quitting their jobs, or retiring, de to overwork and burnout. Uncertainty over the economy forced many to stay put in significant numbers during the pandemic, even if they were unhappy, but this is changing as more people have been vaccinated and the country begins to reopen.
• Canada’s scorching hot housing market is also starting to cool as burned-out buyers shift their focus from getting more space to getting back to normal after COVID-19.

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

European and Asian economies:

• Shares in Europe fell on concerns that the increase in coronavirus cases could derail an economic recovery.
• Some market participants also are worried that central banks might tighten monetary policy sooner than expected to quell inflation. The UK in particular saw inflation accelerate to 2.5% in June – the highest level since August 2018.
• Concerns about the rapidly spreading delta variant of the coronavirus also weighed on yields.
• The UK is set to lift all lockdown measures this week, even as the number of cases rise. However, countries such as France and the Netherlands reimposed restrictions to help curb the spread of the new variant.
• Japan’s stock markets registered modest gains for the week despite Tokyo being placed under its fourth coronavirus state of emergency, set to last until August 22nd, to cover the duration of the Olympic Games.
• The Bank of Japan at its July meeting left short- and long-term interest rates unchanged.
• China saw a choppy week, but markets did show relief after China’s second-quarter gross domestic product (GDP) report on Thursday was inline with expectations.
• On the pandemic front, provinces in southern China have continued to see a small number of new coronavirus cases.
• Analysts welcomed the Chinese central bank’s move as well to cut the required reserve ratio for banks by 0.05%, which will offer some insurance against a second-half slowdown.
• June economic data was also upbeat with retail sales coming stronger than expected, while power consumption was robust, suggesting that few factories had been affected local lockdowns.
• Increased regulatory scrutiny of U.S.-listed Chinese internet companies continued to concern foreign investor’s however.

What to watch this week:

• German Producer Price Index (PPI) (June)
• U.S. Building Permits (June)
• U.S. Housing Starts (June)
• People’s Bank of China (PBOC) Interest Rate Decision
• European Central Bank (ECB) Interest Rate and Monetary Policy Decisions
• U.S. Existing Home Sales (June)
• Canadian Retail Sales (May)
• U.K. Retail Sales (June)

• 

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

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