ClearWater Market Commentary as of May 17th, 2021

Here is the ClearWater Market Commentary as of May 17th, 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 2021/05/14 – Source: www.marketwatch.com}

^{As of 2021/05/14}

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

US economy (S&P 500 -0.35%):

• Inflation worries dragged stocks down from record highs last week. Investors confronted stark signs of higher inflation, but a late rally in the week moderated the week’s declines.
• The US Labor Department reported that core (excluding food and energy) consumer prices jumped by 0.9% in April, the most in nearly forty years. The headline CPI rose 4.2%, which exceeded forecasts of 3.6%. 
• However, stocks recovered some momentum on Thursday due to the bigger-than-anticipated drop in jobless claims hit a pandemic-era low. Plus the economy’s continued reopening and the surprising guidance from the Center of Disease Control’s announcement that fully vaccinated people do not need to wear face masks or social distance in most indoor circumstances renewed confidence. 
• Also, despite the inflation fears the US Fed continued to stress that inflation is likely to prove only temporary. These repeated assurances helped quell the sell-off. 

Canadian markets (S&P/TSX -0.54):

• Markets on both sides of the border were focused on U.S. inflation last week, which likely provides a good blueprint for the Canadian price data released on Wednesday. 
• Canadian April inflation will likely follow a similar path, but the price pressures could be less intensive given the lagged economic reporting compared to the U.S. 
• Canadian factory prices (Apr.) soared 14.2% y/y amid surging commodity prices (led by a 166% jump in soft lumber prices). This was the largest increase in factory prices since 1980.

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

European and Asian economies:

• Shares in Europe fell with global markets amid signs of accelerating inflation, stoking fears that interest rates could increase.
• The Indian variant of coronavirus sparked concerns as well with the European Commission halting non-essential travel from India. 
• The European Central Bank had its most recent meeting, and financing conditions in the Eurozone seem stable and they have revised upwards the continents growth forecasts. Rising vaccination rates, the prospect of lockdown easing across the region, and improving export demand prompted these upward revisions. 
• Japanese stock markets registered sizable losses for the week amid a bout of volatility following an unexpectedly sharp rise in the U.S. consumer price index. 
• Accelerating coronavirus infection rates and the announcement that a state of emergency will be declared in three more prefectures also dampened sentiment. 
• Chinese stocks rose strongly for the week after a week of mixed economic data.

What to watch this week:

• Canadian and Chinese retail sales data
• Canadian and US housing data
• Canadian, Eurozone, UK and Chinese inflation data 
• Eurozone and UK consumer confidence
• Eurozone and Japanese GDP data
• Eurozone and Chinese trade data 
• Chinese industrial production and fixed asset investment data 
• Global Purchasing Manager Indices  
• 19 S&P 500 and 4 S&P/TSX companies report earnings

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

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