ClearWater Market Commentary as of November 5th, 2021

Here is the ClearWater Market Commentary as of November 5th, 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	1.02%
1 Month	5.34%
YTD	22.61%
1 Year	30.88%

^{As of 2021/11/05 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Russell 2000	3.75%	23.98%
Nasdaq	3.10%	23.90%
CAC 40	2.21%	27.02%
S&P 500	2.00%	25.10%
DAX	1.57%	17.01%
Dow Jones Industrial	1.35%	18.68%
S&P/TSX Composite	1.02%	23.22%
FTSE 100	0.26%	13.11%
Nikkei 225	-0.13%	7.25%
Hang Seng Index	-1.12%	-8.76%
Shanghai Composite	-1.38%	0.54%
WTI Cruse (oil)	-2.50%	68.00%

^{As of 2021/11/05 – Source: www.marketwatch.com}

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

US economy (S&P 500 2.00%):

• Stocks posted impressive weekly gains as a relatively dovish Federal Reserve policy meeting, healthy economic data, and a strong tail end to the earnings season all boosted sentiment toward equities.
• The Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite all reached record highs. Technology stocks and small-caps were particularly strong, and growth shares outperformed value stocks.
• Oil prices dropped from their recent highs after Biden administration officials mentioned the possibility of releasing supply from the strategic petroleum reserve, hurting energy sector stocks.
• The quarterly earnings season wound down with ongoing strong results as profit margins held up well despite higher commodity prices and supply chain disruptions in various industries.
• However, equity investors seemed to punish the companies with earnings that lagged consensus expectations more than they rewarded those that beat expectations.
• At Wednesday’s conclusion of the Federal Reserve’s policy meeting, the central bank stated that it will begin to slow its monthly bond purchases by USD 15 billion later this month.
• By not specifying the speed of the taper beyond December, the widely expected tapering announcement gives the Fed the flexibility to make adjustments as economic conditions evolve.
• This seemed to put a dovish spin on the tapering announcement for stock investors, who drove equities higher following the Fed meeting.
• Economic data released during the week was generally robust, showing that the economy gained strength as the late-summer wave of the delta variant eased.

Canadian markets (S&P/TSX 1.02%):

• Canada’s main stock index closed the week setting another new high, with strong jobs reports along with crude price gains and positive earnings reports lifting the heavyweight energy sector.
• The S&P/TSX composite index was up 113.69 points to a record close of 21,455.82, after hitting an intraday high of 21,473.78.
• The continued upward move partly reflected a positive reaction to a Labor Department report showing stronger than expected U.S. job growth in the month of October.
• With employment increasing by more than expected, the unemployment rate fell to 4.6 percent in October from 4.8 percent in September, hitting its lowest level since March of 2020.
• The rally was assisted by boosts in energy came amid a substantial rebound by the price of crude oil, with crude for December delivery jumping $2.46 or 3.1 percent to $81.27 a barrel after moving sharply lower over the two previous sessions.
• The Labor Department described the job growth as widespread, with notable job gains in leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing.
• The Canadian dollar traded for 80.31 cents US compared with 80.33 cents US on Thursday.

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

European and Asian economies:

• Shares in Europe rose on strong corporate earnings results and signals from the European Central Bank (ECB) that interest rates would stay low for some time.
• The UK pound weakened against the U.S. dollar after the Bank of England (BoE) unexpectedly kept interest rates unchanged. UK stocks tend to gain when the pound falls because many companies that are part of the index are multinationals with overseas revenues.
• The European region is now the “epicentre” of the global novel coronavirus pandemic and could see another 500,000 deaths by February, Hans Kluge, the head of the World Health Organization’s Europe region warned.
• He blamed low vaccination rates in the Baltics, Balkans, and Central and Eastern Europe and the relaxation of social and public health measures for a surge in infections and deaths.
• ECB President, Christine Lagarde, hardened her message on the central bank’s policy stance at an event in Lisbon, saying an interest rate hike is “very unlikely” next year and that financing conditions must remain favourable. She reiterated that the outlook for inflation over the medium term remains subdued.
• French and German industrial production fell unexpectedly in September, as supply chain bottlenecks caused shortages.
• Japanese equities were buoyed over the week by the convincing election victory of Prime Minister Fumio Kishida’s ruling Liberal Democratic Party (LDP).
• Investors were encouraged by the prospects of stable government and policy continuity.
• Investors’ focus now turns to the large-scale stimulus package that Kishida has promised to draw up—by mid-November according to the Kyodo news agency—which is likely to comprise financial aid for businesses and people hit hard by the coronavirus pandemic.
• The Bank of Japan (BoJ) also reaffirmed that they will not follow the U.S. Federal Reserve in dialling back easing, given Japan’s different circumstances.
• The BoJ also reaffirmed the central bank’s commitment to achieving its 2% inflation target.
• Chinese markets recorded a weekly loss as headlines about the beleaguered property sector and a growing COVID-19 outbreak across the country dampened sentiment.
• Renewed restrictions in many places raised worries about supply chain constraints dampening the country’s growth outlook as infections spiked near a three-month high.
• Kaisa Group Holdings became the latest developer in China’s USD 5 trillion property sector to reveal that it was having debt problems. The Shenzhen-based company, which has the most offshore debt coming due over the next year in the sector after China Evergrande Group, reportedly put 18 property projects valued at USD 12.8 billion on the auction block.
• China’s property sector is grappling with a deepening liquidity crisis reflected in a wave of offshore debt defaults, credit rating downgrades, and selling in the stocks and bonds of major developers.
• Seven of the top 10 China-listed developers by revenue recorded steep declines in profitability in the July-to-September quarter, which has increased pressure on Beijing to support the stressed sector.
• On the economic front, China’s official manufacturing Purchasing Managers’ Index fell worse than expected, below the 50-point mark separating growth from contraction.
• October marked the second month that factory activity contracted and was the latest sign that the economy was losing steam after a strong recovery from the pandemic.

What to watch this week:

• No material releases in Canada 
• US and Chinese inflation data
• Eurozone and UK industrial production data
• UK GDP and trade data
• Chinese trade, money supply and aggregate yuan financing data
• 13 S&P 500 and 74 S&P/TSX companies report earnings

• 

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

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