ClearWater Market Commentary as of November 16th, 2020

Here is the ClearWater Market Commentary as of November 16th, 2020:

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	2.41%
1 Month	3.59%
YTD	-1.15%
1 Year	-1.05%

As of 2020/11/13 – Source: www.marketwatch.com

Index Performances	Last 5 Days	YTD
CAC 40	8.45%	-10.00%
WTI Crude (oil)	7.02%	-34.46%
FTSE 2000	6.88%	-16.26%
Russell 2000	6.08%	4.53%
DAX	4.78%	-1.30%
Nikkei 225	4.36%	7.31%
Dow Jones Industrial	4.08%	3.30%
S&P/TSX Composite	2.41%	-2.27%
S&P 500	2.16%	10.97%
Hang Seng Index	1.73%	-7.21%
Shanghai Composite	-0.06%	8.52%
Nasdaq	–0.55%	31.84%
Gold	-3.24%	24.22%

As of 2020/11/13

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

Global action reaches a record high thanks to encouraging news about vaccines against COVID-19.

Stock markets around the world rallied this week after Pfizer Inc. released a large-scale study that showed its COVID-19 vaccine prevented up to 90 percent of infections. The prospect of a faster “return to normal” has propelled the MSCI All-Country Index to a record high. Nearly all major stock market indices in developed markets rose. A notable exception was the Nasdaq (-0.55%) in the United States, which sank under the weight of retiring “lockdown winners” such as Amazon and Netflix. Moreover, ignoring the surge in COVID-19 cases in the United States and Europe, optimistic investors withdrew capital from so-called “safe haven” asset classes, such as gold and government bonds, causing bond yields to rise. Confidence that a vaccine against COVID-19 could increase economic activity and thus increase demand for oil pushed the price of WTI (+7.02%) to its highest level in two months.

• Canadian markets (S&P/TSX : +2.41%):

The progression of the Canadian S&P/TSX Composite Index was led by the energy sector. The positive implications of an effective vaccine for economic growth triggered gains of more than 2% for the Canadian stock index, despite fears that a Biden administration in the United States would cancel the permit for the Keystone XL pipeline.

Market Sectors: The financial sector, which benefits from higher interest rates, rose in response to rising bond rates. In fact, the Canadian government bond rate (10-year maturity) reached its highest level since the beginning of April.

Sectors in decline were led by Information Technology, where the heavyweight Shopify fell in tandem with other global companies that had benefited from the global lockdown. The materials sector was also particularly weak, as the price of gold fell to a four-month low.

• US economy (S&P 500: +2.16%):

With the U.S. elections over, S&P 500 stocks reflected the same themes as those seen on the Canadian side: the strength of the energy and financial services sectors and the weakness of companies in the technology sectors.

Growing optimism for improved economic growth led to a pronounced outperformance of value stocks relative to growth stocks and small and mid-cap stocks relative to large-cap stocks. Value stocks and small and mid caps, which have been hit hard by the pandemic, have significantly underperformed since the beginning of the year.

Optimism in U.S. equity markets was reinforced by a larger than expected decline in unemployment claims, which were at their lowest level since March.

S&P 500 Sector Performance as of November 13th, 2020:

Performance 2020: S&P 500/400/600 Sectors:

• European and Asian economies:

All major stock markets in Europe and Asia rose. The recovery in Japanese equities brought the Nikkei 225 index (+4.36%) to its highest level since the beginning of 1991.

Equities in Europe were generally much stronger than those in North America. This caused some surprise, given that Europe appears to be heading towards a double-dip recession due to its new lockdown in response to the skyrocketing number of COVID-19 cases.

On the other hand, the German ZEW Investor Sentiment Survey fell sharply and marked its second consecutive monthly decline, while Eurozone industrial production unexpectedly fell in September.

Finally, in Spain, the effect of the news of progress on vaccines was particularly evident in its stock market. Indeed, Spain was one of the countries most affected by COVID-19 and its stock market is one of the worst performing among developed economies since the beginning of the year. This week the Spanish IBEX 35 Index was by far the best performing with a performance of 13.52%.

What to watch this week:

Canada:

• Manufacturing sales – September
• Housing starts – October
• Consumer Price Index – Month of October
• Retail sales – month of September

United States:

• Retail sales – month of October
• Industrial production – month of October
• Housing Starts and Building Permits – Month of October
• Existing home sales – month of October
• Increase in the number of cases of COVID-19
• The continuation of discussions on Brexit
• Euro zone GDP updates
• Euro zone Industrial production
• U.S. inflation data
• Third-quarter results season continues

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

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