ClearWater Market Commentary as of May 6th, 2022

Here is the ClearWater Market Commentary as of May 6th, 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 Day-0.28%
1 Month-7.73%
1 Year3.84%

As of 2022/05/06 – Source:

Index PerformancesLast 5 DaysYTD
WTI Crude (oil)5.60%46.90%
S&P/TSX Composite-0.28%-2.78%
Dow Jones Industrial-0.50%-9.46%
S&P 500-0.77%-13.49%
Shanghai Composite-1.50%-17.54%
Nikkei 225-1.52%-8.27%
FTSE 100-2.08%0.05%
Russell 2000-2.33%-18.09%
CAC 40-2.60%-12.51%
Hang Seng Index-5.16%-14.51%

As of 2022/05/06 – Source:

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

US economy (S&P 500 -0.77%):

  • Most of the major benchmarks endured a fifth consecutive week of losses as the interest rate and inflation worries continued to weigh on sentiment, especially toward growth stocks. The losses briefly pushed the Dow Jones Industrial Average into correction territory, down more than 10% from its recent highs, where it joined the S&P 500 and S&P MidCap 400 indexes.
  • The Nasdaq Composite and the small-cap Russell 2000 Index ended the week firmly in bear markets, down more than 25%.
  • Wall Street had been bracing for a week of volatility given the Federal Reserve’s highly-anticipated policy meeting on Tuesday and Wednesday, along with several important economic data releases.
  • On Wednesday afternoon, Fed policymakers announced a 50-basis-point (0.50 percentage point) increase in the federal funds’ target rate, the largest since 2000, to a range of 0.75% to 1.00%.
  • The market’s initial reaction was muted, as the moves were largely in line with expectations.
  • At his post-meeting press conference, however, Fed Chair Jerome Powell surprised many by stating that a hike of 75 basis points (0.75 percentage points) was “not something we are actively considering.” Together with his assurances that a recession was unlikely in the near term, his comments were generally perceived as more dovish than anticipated.
  • The market’s gains more than unwound on Thursday, however, as investors appeared to reconsider whether a 75-basis-point increase was in fact off the table—and would be confirmed as an ongoing possibility by other Fed officials scheduled to speak the next day.
  • Some potentially worrisome inflation data probably reinforced such concerns. The Commerce Department reported that nonfarm unit labour costs jumped 11.6% in the first quarter, well above elevated consensus forecasts of a rise of around 9.9%.
  • Benchmark 10-year U.S. Treasury yield breaks through 3% for the first time since 2018

Canadian markets (S&P/TSX -0.28%):

  • 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 historic highs in April.

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

European and Asian economies:

  • Shares in Europe tumbled amid fears that central banks may have to step up their efforts to control inflation, potentially increasing the risk to economic growth. Lockdowns in China to curb the spread of the coronavirus and the Ukraine conflict added to the uncertainty.
  • European Union (EU) envoys will continue to discuss a possible embargo on Russian oil over the weekend after meeting resistance from Hungary, Slovakia, and the Czech Republic, which depend heavily on these energy imports.
  • While most countries would be expected to impose a ban within six months, Brussels may now offer the Czech Republic a cutoff date of June 2024, while Hungary and Slovakia may have until the end of that year.
  • The BoE raised its key interest rate 25 basis points to 1.0%, the highest level since 2009, seeking to dampen inflation. However, the central bank delayed reducing its stockpile of bonds bought under its asset purchase program. The bank also highlighted the potential of the UK slipping into a recession by year-end and warned that inflation could exceed 10% in the fourth quarter.
  • More European Central Bank (ECB) policymakers appeared to press for an early increase in interest rates after the end of the quantitative easing program sometime in the third quarter.
  • German manufacturing orders fell a much-greater-than-expected 4.7% sequentially in March, driven by lower foreign orders, especially from outside the eurozone. Industrial production dropped 3.9%, the largest decline since the start of the coronavirus pandemic.
  • In a holiday-shortened week (the market was closed May 3‒5), Japanese equities rose modestly despite the volatility induced by the U.S. Federal Reserve’s decision to implement the first 50-basis-point interest rate rise since 2000.
  • On the economic data front, the Tokyo core consumer price index (CPI) rose 1.9% year on year in April compared with 0.8% in March. Regarded as a leading indicator of countrywide price trends, the reading suggested an increased likelihood of Japan’s CPI reaching the Bank of Japan’s (BoJ’s) 2% inflation target in the coming months. The BoJ recently raised its outlook for inflation, citing the impact of a significant rise in energy prices, although it said that the increase is likely to be temporary.
  • During a visit to the UK, Prime Minister Fumio Kishida announced that the next easing of Japan’s border control measures will take place in June, when a smoother entry process, similar to that adopted by other Group of Seven leading developed economies, will be introduced.
  • On a separate note, Kishida spoke about reducing Japan’s dependence on Russian energy, emphasizing that nuclear and renewables would be a part of the country’s future energy policy. He reasserted Japan’s commitment to carbon neutrality by 2050 and the goal of reducing greenhouse gas emissions by 46% by 2030 while ensuring a stable energy supply.
  • Chinese markets fell as Beijing showed no sign of relaxing its zero-tolerance approach to the coronavirus, raising worries about the economic cost of widespread lockdowns.
  • Relaxing virus prevention and control measures will inevitably lead to large-scale infections, serious illnesses, and deaths, according to a statement released after a meeting of Politburo, the decision-making body of the Chinese Communist Party.
  • Many of Shanghai’s 25 million residents remain under varying degrees of lockdown even though the city started to ease restrictions as infections have declined. Meanwhile, Beijing announced mass testing and increased restrictions in response to a growing outbreak. In a sign of how the virus restrictions have hit domestic consumption, spending over China’s five-day Labor Day holiday plummeted 43% from a year earlier to CNY 64.7 billion, or roughly USD 9.8 billion.
  • In economic news, China’s service sector activity shrank in April at the second-steepest rate on record.
  • Tensions with the U.S. remained elevated as the U.S. Securities and Exchange Commission (SEC) added over 80 U.S.-listed Chinese companies to its list of entities facing possible delisting from U.S. exchanges. The SEC’s growing list of Chinese companies facing expulsion stems from a long-standing dispute with China over auditing standards, which could see dual-listed Chinese companies removed as early as 2024 if they fail to comply with U.S. auditing rules.
  • In another sign of growing tensions with the West, China has ordered central government agencies and state-backed companies to replace foreign-branded personal computers with domestic alternatives in two years, Bloomberg reported. The overhaul marks one of Beijing’s most aggressive moves to date to reduce the country’s reliance on U.S. technology.

What to watch this week:

  • Canada building permits data
  • US CPI and PPI data
  • Japan balance of payment and money supply data
  • Eurozone industrial production data
  • China CPI, PPI and international trade data
  • 21 S&P 500 and 81 S&P/TSX companies report earning

Sources:,, Barron’, and

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