ClearWater Market Commentary as of May 20th, 2022

Here is the ClearWater Market Commentary as of May 20th, 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 Day0.49%
1 Month-3.79%
1 Year3.50%

As of 2022/05/20 – Source:

Index PerformancesLast 5 DaysYTD
Hang Seng Index3.46%-10.65%
Nikkei 2251.62%-15.11%
Shanghai Composite1.50%-15.31%
FTSE 1001.01%-6.13%
S&P/TSX Composite0.49%-4.83%
WTI Crude (oil)0.30%47.30%
CAC 40-0.33%-17.07%
Russell 2000-1.98%-21.47%
Dow Jones Industrial-2.90%-14.00%
S&P 500-3.00%-18.01%

As of 2022/05/20- Source:

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

US economy (S&P 500 -3.00%):

  • Wall Street continued its weekly losing streak as fears grew that inflation was causing consumers to pull back on discretionary spending, setting the stage for a coming recession.
  • At its low point on Friday, the S&P 500 Index was down roughly 20.9% from its January intraday high, exceeding the 20% threshold for a bear market and placing it back at levels last seen in February 2021.
  • Disappointing earnings and revenue results from several of the nation’s major retailers appeared to spill over into negative broader sentiment. Most dramatically, shares in Target fell roughly 25% after earnings fell short of estimates by nearly a third, which the company attributed to a combination of reduced sales of discretionary items, such as televisions, and higher costs.
  • Results from Walmart, Lowe’s, and Home Depot also fell short of expectations—while Costco shares may have tumbled in part on rumours that it was raising the price of its popular café hot dog.
  • Comments from Federal Reserve officials during the week did little to calm inflation and interest rate fears. On Wednesday, Fed Chair Jerome Powell told The Wall Street Journal that taming inflation was an “unconditional need” and that policymakers wouldn’t hesitate to raise rates as much as necessary, even if it meant “some pain [was] involved.”
  • The week’s economic data offered mixed signals about whether a recession was imminent, and Wall Street’s reaction to the data was also arguably hard to decipher. On Tuesday, investors seemed to welcome news that retail sales, excluding the volatile auto segment, had risen more than expected in April, while March’s gain was revised upward.

Canadian markets (S&P/TSX 0.49%):

  • Canada’s main stock index suffered its worst day in more than five months as investors appeared to put aside dovish Federal Reserve comments a day earlier to instead focus on the magnitude of interest rates to come. All 11 major sectors on the TSX were lower.
  • We witnessed a now-rare occurrence last week, with the TSX composite underperforming the S&P 500.
  • Disappointing Q1 earnings for Shopify are the main culprit, with the stock closing the week down 11.3%.
  • Energy companies maintaining their recent string of outperformance. All three of the major Canadian energy companies reporting earnings this week, Enbridge, Canadian Natural Resources and Pembina Pipelines, beat consensus, their profits buoyed by rising oil and gas prices.
  • One factor behind the stickiness of high oil prices in 2022 has been the Organization of Petroleum Exporting Countries’ (OPEC) refusal to ratchet up its oil production quota, which the US and its European allies have been pushing for. 
  • This week, OPEC once again disregarded their pleas and repeated their standard monthly 432,000-barrell production hike for the month of June. WTI oil prices rose 5.4% on the week, closing above US$110.
  • Canada’s economy created 15.3k jobs in March (40k expected). The unemployment rate ticked down to 5.2% (from 5.3%, in line with expectations), but the participation rate weakened unexpectedly to 65.3%(from 65.4%, 65.4% expected.
  • Canada’s Purchasing Manager’s Index (PMI) measures moderated from their historical highs in April.

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

European and Asian economies:

  • Shares in Europe pulled back amid fears of slowing economic growth and faster interest rate increases.
  • ECB Governing Council member, Klaas Knot, appeared to suggest the possibility of a 50-basis-point interest rate increase in July.
  • The latest macro data provided more evidence that the UK economy may be on the brink of stagnation. Inflation accelerated in April to the highest level since 1982, hitting 9.0% on surging electricity and gas prices. The unemployment rate in the three months ended March 31 fell to 3.7%—the lowest level since 1974—with job vacancies exceeding the number of jobless for the first time on record.
  • The European Commission (EC) cut its forecast for 2022 GDP growth to 2.7% from 4.0% and raised its estimate for inflation to 6.1% from 3.5% to reflect higher energy prices.
  • German producer prices rose by a record amount in April, surging 33.5% year over year. Energy prices increased 87.3% over this period due mainly to soaring prices for natural gas.
  • The EC announced a EUR 300 billion plan called REPowerEU that aims to end the European Union’s (EU’s) dependence on Russian energy imports before 2030. It is based on four pillars: saving energy, substituting Russian energy with other fossil fuels, boosting green energy, and financing new pipelines and liquefied natural gas terminals. Unused loans from the pandemic recovery program will provide most of the cash for the plan.
  • Japan’s stock market returns were positive for the week, with the Nikkei 225 Index gaining 1.18% and the broader TOPIX Index up 0.71%. Regional sentiment toward the end of the week was boosted by China’s action to support its property sector, the latest in a series of monetary easing measures aimed at boosting an economy weighed down by coronavirus lockdowns.
  • An announcement by Japan’s government that the country’s strict border control measures would be eased further also lent some support.
  • Japan’s economic recovery lagged that of its global peers, with the country’s GDP contracting by an annualized 1% quarter on quarter during the first three months of 2022. The Bank of Japan (BoJ) has repeatedly said that it will continue with its massive monetary stimulus to support the post-pandemic recovery—the relatively weak GDP data are likely to reinforce this stance.
  • Inflation exceeded the BoJ’s 2.0% target in April, as the core consumer price index rose 2.1% from a year earlier.
  • Chinese stocks rose as the central bank cut interest rates to support the country’s flagging property sector even as disappointing economic data weighed on sentiment. The broad, capitalization-weighted Shanghai Composite Index advanced 2.0% and the blue-chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, climbed 2.2%.
  • The previous Friday, the People’s Bank of China (PBOC) cut the five-year loan prime rate (LPR), a reference for home mortgages, by an unexpectedly large 15 basis points to 4.45%.
  • The reduction in the five-year LPR signals that China’s government is trying to bolster homebuying demand. Given that the rate cut was done at a national rather than a regional level makes the PBOC’s move more significant.
  • Economic data released last week pointed to slowing growth. Retail sales and industrial output data for April lagged estimates amid continued pandemic lockdowns reflecting China’s zero-COVID approach.

What to watch this week:

  • S&P Global Composite PMI Survey – Flash Estimate (May)
  • New Home Sales (April)
  • FOMC Meeting Minutes
  • Germany Real GDP Growth Rate (Q1 2022)
  • U.S. Real GDP Growth Rate – Second Estimate (Q1 2022)
  • Pending Home Sales (April)
  • Corporate Profits (Q1 2022)
  • Personal Consumption Expenditures (PCE) Price Index (April)

Sources:,, Barron’, and

Thank you for checking out our ClearWater Market Commentary for May 20th, 2022 If you would like to receive the ClearWater Commentary at the start of every week, sign-up for our Newsletter.