ClearWater Market Commentary as of November 26th, 2021

Here is the ClearWater Market Commentary as of November 26th, 2021:

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	-1.76%
1 Month	0.42%
YTD	23.45%
1 Year	21.44%

^{As of 2021/11/26 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Shanghai Composite	0.10%	2.62%
S&P/TSX Composite	-1.76%	23.45%
Dow Jones Industrial	-1.97%	14.03%
S&P 500	-2.20%	22.33%
FTSE 100	-2.49%	9.03%
Nikkei 225	-3.34%	4.76%
Nasdaq	-3.52%	20.20%
Hang Seng Index	-3.87%	-11.57%
Rusell 2000	-4.15%	13.73%
CAC 40	-5.24%	21.41%
DAX	-5.59%	11.21%
WTI Crude (oil)	-9.50%	41.70%

^{As of 2021/11/26 – Source: www.marketwatch.com}

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

US economy (S&P 500 -2.20%):

• Stocks declined for the holiday-shortened week after Friday’s news about the emergence of a new, potentially more contagious, coronavirus variant in South Africa triggered a sharp sell-off in riskier assets such as equities.
• Before the Thanksgiving holiday, information technology stocks suffered as rising Treasury yields made expected corporate profits far in the future less valuable in today’s terms.
• On Monday morning, President Joe Biden said that he plans to renominate Jerome Powell as Federal Reserve chair.
• President Biden also formally announced that the U.S. will release oil from the Strategic Petroleum Reserve to try to pressure gasoline prices, which are a key part of headline consumer price inflation figures, lower.
• Oil prices actually rose on the news, which was widely anticipated, as the market seemed to think that the Organization of the Petroleum Exporting Countries and Russia (known as OPEC+) will simply reduce its production to offset the move.
• On Friday, stocks fell sharply after scientists in South Africa said that they have found a new variant of the coronavirus that appears to spread more quickly than the delta variant that caused a global wave of cases earlier in 2021.
• The news prompted a sell-off in riskier asset classes and a rally in safe havens, such as Treasuries. The price of West Texas Intermediate crude oil, the U.S. benchmark for the commodity, plummeted more than 10% on Friday on fears that the new variant will damage demand for oil.
• On a positive note, the US saw the lowest level of weekly jobless claims since 1969.

Canadian markets (S&P/TSX -1.76%):

• Canada’s main stock index ticked higher earlier in the week, driven largely by gains in the technology sector on what was otherwise a quiet start to the week.
• However, it then had its worst day in more than a year Friday as worries about a new COVID variant in southern Africa prompted a broad-based selloff by spooked investors.
• The S&P/TSX composite index was down 487.28 points at 21,125.90, with all but nine of the 231 stocks that make up the index having negative performance Friday.
• Hardest hit were those sectors and companies that have most benefited from recent global progress in getting the COVID-19 pandemic under control, such as airlines and other travel-related stocks. Air Canada took one of the biggest dives, with its share price falling almost nine per cent on fears a new variant will impact travel demand or bring about more government-imposed travel restrictions.
• Energy stocks also took a beating as the price of oil fell more than 13 per cent.

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

European and Asian economies:

• Shares in Europe fell sharply on fears that the economic recovery might be derailed by the imposition of tight coronavirus restrictions and the spread of a new variant of the virus.
• The UK banned travel from South Africa and its neighbors to contain the new strain of coronavirus, and the European Union (EU) planned similar moves.
• Earlier in the week, large-scale protests broke out in the Netherlands, Belgium, Austria, and Italy after they imposed stricter controls due to the spike in infections. However, apart from the Netherlands and Austria, most countries stopped short of imposing lockdowns.
• Social Democrat leader Olaf Scholz will succeed Angela Merkel as chancellor of Germany after clinching a deal with the Greens and the liberal Free Democrats (FDP) to form a coalition government.
• Sweden’s first female prime minister, Social Democrat Magdalena Andersson, resigned after less than 12 hours in the post when parliament rejected her budget bill, which collapsed her center-left government.
• Eurozone business activity unexpectedly accelerated in November, according to purchasing managers’ indexes (PMI). However, the average reading of the index came in lower than previous quarters indicating the economic recovery is slowing.
• Japanese equities battled on for much of the week, only to succumb late in the week as worries about the pace of economic recovery ultimately undermined sentiment.
• Japanese equity markets began the shortened week in cautious fashion, as renewed coronavirus concerns in Europe, as well as rising cases in the U.S., sparked worries about the pace of the global economic recovery.
• However, as markets closed ahead of the Thanksgiving Day holiday, early losses had been broadly pared back. The Japanese government’s record USD 490 billion stimulus package announcement in the previous week was likely a supportive factor.
• Ultimately, however, news on Friday of the potentially new variant as well as rumours of the Fed potentially beginning their tapering of Federal Bond purchase, finally proved to much for investors sending equity markets sharply lower at week’s end.
• Chinese markets weakened amid U.S.-China tensions and rising economic pressures that raised expectations for supportive government measures.
• Relations with the U.S. remained tense over the status of Taiwan and trade issues. The U.S. Commerce Department issued a trade blacklist naming a dozen Chinese companies that it said supported the military modernization of the People’s Liberation Army. In response, a Chinese official said the U.S. should not expect China’s military to compromise regarding Taiwan.
• In a separate development, the U.S. Federal Communications Commission (FCC) asked a federal appeals court to reject China Telecom’s bid to continue providing services in the U.S., arguing that China Telecom’s ownership allows Beijing to access and possibly disrupt or misroute U.S. communications.
• On the economic front, China kept its loan prime rate unchanged for the 19th straight month. However, monetary policy easing has been taking place through other channels, including looser mortgage lending, deposit rate reforms, and reductions to domestic banks’ reserve required ratio.
• The property sector remained under duress. Kaisa Group, the latest high-profile developer trying to avert default, announced a bond exchange program for its creditors.

What to watch this week:

• China Non-Manufacturing PMI (November)
• Consumer Board Consumer Confidence Index (November)
• Markit Manufacturing PMI (November)
• ISM Manufacturing PMI (November)
• U.S. Construction Spending (October)
• U.S. Total Vehicle Sales (November)
• ECB Non-Monetary Policy Meeting 
• Nonfarm Payrolls (November)
• Markit Services PMI (November)

• 

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

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