ClearWater Market Commentary as of March 31st, 2023

Here is the ClearWater Market Commentary as of March 31st, 2023:

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 Day2.97%
1 Month-2.34%
1 Year-8.40%

As of 2023/03/31 – Source:

Index PerformancesLast 5 DaysYTD
WTI Crude (Oil)9.20%-5.70%
MSCI EAFE3.70%7.60%
CAC 403.51%14.36%
S&P/TSX Composite2.97%3.59%
Russell 20002.78%2.34%
FTSE 1002.31%4.31%
S&P 5001.68%6.86%
Dow Jones Industrial1.57%0.21%
Shanghai Composite0.86%6.15%
Hang Seng Index0.79%2.36%

As of 2023/03/31- Source:

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

US economy (S&P 500 1.68%):

  • The major equity indexes posted solid gains in a relatively quiet week for economic data releases and financial news. Small-caps outperformed large-caps, and value stocks advanced modestly more than growth stocks. Rising oil prices boosted energy stocks, which make up a significant part of value indexes. U.S. benchmark West Texas Intermediate crude oil rose more than 9% for the week, climbing back above the USD 70 per barrel level.
  • The week also brought the end of the first quarter of 2023. The technology-heavy Nasdaq Composite jumped more than 16% for the quarter, while the broad market S&P 500 Index rose approximately 7%. However, the narrowly focused large-cap Dow Jones Industrial Average was only modestly higher.
  • Bank stocks, which have declined sharply since Silicon Valley Bank (SVB) and Signature Bank collapsed earlier in March, advanced, with the widely followed KBW Bank Index easily outpacing the broad market’s gains. 
  • On Thursday, the Biden administration released a set of proposed new regulations for mid-size banks, or those with assets between USD 100 billion and USD 250 billion. The potential new rules would impose more stringent capital and liquidity requirements as well as require mid-size banks to pass more frequent stress tests under a wider range of market scenarios. The proposed changes would bring regulation of mid-size banks more in line with the rules faced by the country’s largest banks.
  • The market received some positive news on inflation, with the U.S. core (excluding food and energy) personal consumption expenditure (PCE) price index for February coming in at 4.6% versus consensus expectations for 4.7%. The core PCE is the Federal Reserve’s preferred measure of inflation. While the February 2023 reading was below the recent high of 5.4% reached in February 2022, it is still well in excess of the Fed’s 2% long-term inflation target. The Commerce Department released its final estimate of fourth-quarter 2022 gross domestic (GDP) product growth, which was revised slightly lower to 2.6%.

Canadian markets (S&P/TSX 2.97%):

  • Canada’s main stock index climbed more than 150 points Friday to close out the first quarter of the year in positive territory in spite of this month’s Silicon Valley Bank-related market turmoil.
  • Riskier stocks benefited from a new report showing the rate of inflation across the United States slowed in February — raising hopes that the U.S. Federal Reserve will be able to ease off the gas on interest rates after a series of rapid rate hikes over the last year.
  • The Canadian Government released its detailed budget for 2023, which contains several interesting measures.  
  • The Bank of Canada appears to have peaked with its interest rate policy. Data from the six-month annualized trend of the Consumer Price Index (CPI) shows a current pace of 2.5%. We believe inflation will continue to trend lower on a year-over-year basis during the rest of 2023. This suggests there is no immediate need to continue rate hikes; a pause in interest rate hikes will be welcome news to Canadian consumers.
  • The Canadian dollar gained against the U.S. dollar during the week, as yields between the countries’ 2-year government bonds narrowed to within 40 basis points of each other. Market participants have started to price in the likelihood of the U.S. Federal Reserve being at the end of its rate-tightening cycle. 
  • This has narrowed the spread between market rates between Canada and the U.S. and has pushed the Canadian dollar higher as a result. 
  • Canadian real GDP (Jan) rose 0.5% (versus 0.4% expected), bouncing back from the -0.1% m/m decline in December. StatsCan’s February flash estimate sees GDP growth rising 0.3% m/m.
  • The largest telecommunications deal in Canadian history was green-lighted Friday after Rogers Communications Inc.’s $26-billion takeover of Shaw Communications Inc. received approval from Ottawa. 
  • The May crude contract was up $1.30 at US$75.67 per barrel and the May natural gas contract was up 11 cents at US$2.22 per mmBTU.
  • The June gold contract was down US$11.50 at US$1,986.20 an ounce and the May copper contract was up less than one cent at US$4.09 a pound.

Performance 2023: S&P 500 Sectors   

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

European and Asian economies:

  • Shares in Europe rallied as fears of financial instability waned. Major stock indexes also posted strong gains.
  • European government bonds broadly climbed as investors digested the implications of strong core inflation data and hawkish comments from European Central Bank policymakers. In the UK, yields on 10-year government debt climbed above 3.5% and ended near that level on increased expectations of another interest rate hike in May.
  • Annual consumer price growth in the euro area slowed to 6.9% in March from 8.5% in February as energy costs subsided, according to a preliminary estimate. The result was below the consensus forecast of 7.1% in a FactSet poll of economists. However, the core rate that excludes volatile food and energy prices ticked up to 5.7% from 5.6% in February. Separately, the unemployment rate in February held steady at 6.6%.
  • The French government said that about 740,000 people participated in nationwide demonstrations on March 28 against pension reforms, although unions put the figure at 2 million. The protests were smaller than the nationwide mobilization the previous week, and there were fewer violent clashes. Unions have called for an 11th day of national strikes on April 6. The government rejected union calls for “mediation” on the changes, but Prime Minister Elisabeth Borne is set to hold talks with unions in the next few days.
  • Revised official data showed that the UK avoided a recession last year, helped by government subsidies for energy bills. Gross domestic product in the fourth quarter grew 0.1% sequentially, instead of being flat, and shrank by only 0.1% in the third quarter—less than the 0.2% contraction initially estimated. Meanwhile, the housing market remained weak. Mortgage lender Nationwide said house prices fell in March at the fastest annual rate since the great financial crisis, while Bank of England (BoE) data showed a big drop in net mortgage lending in February.
  • BoE Governor Andrew Bailey said in a speech that recent problems in the banking industry would not sway the central bank’s focus on inflation. He acknowledged that there were “big strains” in the global banking system but added that UK lenders were resilient and able to support the economy.
  • Japan’s stock markets rose over the week as sentiment was boosted by easing concerns about the recent turmoil in the global banking sector and some expectations that the U.S. 
  • On the domestic front, core consumer price inflation in the Tokyo area slowed for the second straight month in March, but the reading still came in ahead of expectations at 3.2% year on year and continued to surpass the Bank of Japan’s (BoJ’s) 2% inflation target. 
  • Japan’s government announced plans to restrict exports of 23 types of leading-edge semiconductor manufacturing equipment, saying equipment makers will need to seek export permission for all regions. The restrictions will come into force in July. Industry Minister Yasutoshi Nishimura said that Japan did not have one specific country in mind with these measures. The announcement comes after the U.S. imposed export restrictions in October on chipmaking tools to China and called on other key suppliers, including Japan and the Netherlands, to follow suit.
  • Prime Minister Fumio Kishida promised progress in the government’s New Capitalism growth plan, which has as a guiding pillar fostering an environment conducive to wage growth. Kishida is seeking to narrow wage differentials between domestic firms and their overseas rivals, keeping in mind different economic situations. He stated that guidelines will be compiled by June with regard to labor market reform, including reskilling workers and facilitating labor turnover.
  • Chinese stocks advanced as strong economic data coupled with supportive comments from Beijing boosted confidence in the country’s growth outlook. 
  • Premier Li Qiang, who became the country’s No. 2 official earlier this month, reinforced China’s commitment to open its economy and deliver reforms that can stimulate consumption and international business. Speaking at the Boao Forum for Asia, a four-day summit for business and government leaders, Li pledged that China’s recovery would deliver new momentum to the world economy despite challenges in the geopolitical environment.
  • Separately, International Monetary Fund (IMF) Managing Director Kristalina Georgieva forecast that China’s rebound would account for approximately one-third of global growth this year amid increased risks to economic stability following banking sector turmoil. The IMF projected that China’s economy would grow 5.2% this year, while global growth would slow to below 3.0%. Last year, China’s GDP grew 3.0%, one of its lowest levels on record.
  • In corporate news, Chinese e-commerce giant Alibaba Group announced a plan to break itself up into six units that can independently raise capital or even seek initial public offerings. Many analysts believe that the company’s overhaul may appease regulators and could mark the end of China’s yearslong crackdown on private enterprise.
  • China’s official manufacturing Purchasing Managers’ Index (PMI) rose to a better-than-expected 51.9 in March, while the nonmanufacturing PMI rose to 58.2, the highest reading since May 2011. Index readings above 50 indicate expansion from the previous month.

What to watch this week:

  • BoC Business Outlook Survey of Consumer Expectations (Q1)
  • US ISM PMI and employment data
  • Germany industrial production data
  • Global PMI data
  • Australia, New Zealand, and India monetary policy announcements

Sources:,, Barron’, and

Thank you for checking out our ClearWater Market Commentary for March 31st, 2023. If you would like to receive the ClearWater Commentary at the start of every week, sign-up for our Newsletter.