ClearWater Market Commentary as of November 30th, 2020

Here is the ClearWater Market Commentary as of November 30th, 2020:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  
  Events and Upcoming Events

Performance of Principle Indexes: 

^{As of 2020/11/27 – Source: www.marketwatch.com}

^{As of 2020/11/27}

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

Despite a week shortened by the holiday in the United States and Japan, stocks, bonds, and commodities unanimously signaled growing optimism about the growth of economic activity in 2021.
Indeed, for the third consecutive week, the week began with a rally in global equities in response to encouraging news on COVID-19 vaccines, this time from AstraZeneca and Oxford University. The stock market rally received a boost after the U.S. General Services Administration recognized Joe Biden as the winner of the presidential election, allowing the transition process to proceed more smoothly. In addition, investors greatly appreciated the news that Joe Biden will appoint former U.S. Central Bank President Janet Yellen as U.S. Treasury Secretary.

The main U.S. stock market indices – including the S&P 500 (+1.58%), the Dow Jones Industrial Average (+1.45%) and the Nasdaq Composite (+2.53%) – reached record levels. In fact, the Dow Jones briefly surpassed the 30,000-point mark for the first time in its history. The Canadian stock market index, the S&P/TSX (+2.22%), for its part, has moved back into positive territory since the beginning of the year. The Nikkei 225 (+4.38%), Japan’s stock market index, reached its highest level since May 1991.
Stock market volatility, which is measured by the volatility index (VIX) of the Chicago Board Options Exchange, fell to its lowest level since February. Finally, expectations of higher demand drove up commodity prices linked to economic growth. West Texas Intermediate (WTI) oil (+7.18%) climbed to its highest price in eight months and copper to its best level in two and a half years.

• Canadian markets (S&P/TSX 500: +2.22% ):

Market Sectors: The S&P/TSX has erased its loss since the beginning of the year mainly due to the recovery of the energy sector. Indeed, while growing economic optimism has supported oil prices, the sector received additional support from a US Energy Information Administration report that showed a surprise drop in US crude oil inventories. However, it should be remembered that several analysts stipulate that global demand will not return to 2019 levels until at least 2022 (world oil).

Health care also had a good week, as cannabis stocks continued to rise due to expectations that the Biden administration may decriminalize marijuana.

• US economy (S&P 500: +1.58% ):

Market Sectors: In the main U.S. stock market index, the S&P 500, the energy and financial services sectors led the gains, while utilities and real estate underperformed.

The outperformance of companies that would benefit from a return to normal economic activity – a theme that has been in the news lately due to vaccines – continued this week. Indeed, mid-cap companies  (profile of Mackenzie U.S. Mid-Cap Opportunities Fund) outperformed large-cap companies. In fact, the Russell 2000 had another excellent week with a performance of +3.99%.

Economic Data: This week’s economic data was more mixed. While some purchasing managers’ indexes suggested that economic activity was growing at the fastest pace since 2015, consumer confidence fell and unemployment claims increased for the second consecutive week. This likely reflected a slowdown in response to the spike in COVID-19 cases and the renewal of restrictions across the country.

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

• European and Asian economies:

All major stock markets in Europe and Asia ended the week in positive territory, with vaccine optimism outweighing declining consumer and business confidence. Signs that cases could peak in Europe led some governments to temporarily ease restrictions for the Christmas vacations.

On the Asian side, stock markets had a good week due to the fact that many countries in the region signed the world’s largest free trade agreement (Regional Comprehensive Economic Partnership).

What to watch this week:

Canada:

• Building Permits – month of October
• GDP – month of September
• Employment Report – month of October

United States :

• Construction spending – month of October
• Employment Report – month of November
• Durable Goods Orders – month of October
• Testimony of US Fed President Jerome Powell before the US Congress

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

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