Here is the ClearWater Market Commentary as of November 9th, 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	4.51%
1 Month	0.86%
YTD	-2.10%
1 Year	-1.05%

As of 2020/10/30 – Source: www.marketwatch.com

Index Performances	Last 5 Days	YTD
Gold	9.01%	32.57%
Shanghai Composite	7.99%	-5.80%
Nikkei 225	7.98%	-17.02%
Hang Seng Index	7.32%	8.63%
S&P/TSX Composite	6.87%	-1.46%
FTSE 100	6.87%	-0.75%
Nasdaq	6.66%	-8.79%
S&P 500	5.97%	-21.64%
Russell 2000	5.87%	2.83%
CAC 40	4.96%	-38.75%
Dow Jones Industrial	4.51%	-4.57%
DAX	3.87%	28.39%
WTI Crude (oil)	2.72%	8.59%

As of 2020/11/09

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

In addition to the election results, early data suggesting that German pharmaceutical giant Pfizer has developed a safe and effective vaccine for COVID-19 is driving the markets today. For more information on this vaccine candidate, click here

Stock markets around the world were up sharply thanks to the outcome of the U.S. elections.

U.S. Elections: Stocks around the world surged and government bond yields fell after Joe Biden’s victory and the likelihood of the Senate remaining under Republican control. The Democrats have not been able to sweep both houses of Congress and the presidency as some had anticipated, so they are likely to be unable to implement many of the major policy changes discussed during their election campaign. 

On the investor side, investors no longer expect tax increases, a rollback of the 2017 corporate tax cuts or significant additional regulation. In addition, there will likely be no “new green deal,” no public health care option, no changes to Senate rules or changes to the structure of the Supreme Court. However, all this may still change, as Senate control will be determined in the second round of Georgia’s elections on January 5, 2021. 

The Nasdaq (+9.01%) was the best-performing stock market index as the technology sector surged while concerns about major changes to U.S. antitrust laws eased. 

Although additional fiscal stimulus measures should help offset the economic damage from COVID-19, the divided U.S. government is pointing to smaller economic stimulus measures. This means less debt-financed spending and less risk of future inflation. As a result, bond rates have fallen, and with them the U.S. dollar. Finally, less stimulus also means that the Federal Reserve may have to do more in response to any slowdown resulting from increased infections and COVID-19-related restrictions. This reinforces expectations of lower interest rates for a longer period of time. 

In brief, the tight results of the U.S. election ensured that the key elements of the bull market in equities would remain in place for the foreseeable future.

• US economy (S&P 500: +7.32% ): 

Market Sectors: The technology and health care sectors led the S&P 500 gains. The Consumer Discretionary and Communication Services sectors were also particularly strong, as Amazon, Facebook and Alphabet were considered the beneficiaries of the U.S. election results. 

Economic Data: As electoral uncertainty faded, economic data continued to show gradual improvement. Economic indices assessing manufacturing and service activity improved and unemployment claims continued to decline.

On Thursday, the Federal Reserve kept interest rates unchanged and made no changes to asset purchase programs. However, Fed Chairman Jerome Powell said he was looking for ways to stimulate stimulus by adjusting quantitative easing.

S&P 500 Sector Performance as of November 6th, 2020 :

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

• Canadian markets (S&P/TSX : +4.51%):

All sectors of the S&P/TSX Composite Index for Canada, with the exception of the energy sector, gained ground as the benchmark index posted its largest weekly increase in more than six months. 

Market Sectors: Health care was the strongest sector as cannabis stocks soared – Democrats indicated during the campaign that they would decriminalize marijuana at the federal level.

The information technology sector was also particularly strong, with the e-commerce heavyweight Shopify Inc. keeping pace with the U.S. technology giants.

In the energy sector, stocks initially rose in value thanks to the International Energy Agency’s report showing sharp declines in crude oil inventories. However, the sector fell due to global demand concerns as European countries tightened travel restrictions due to increases in COVID-19 cases. 

Economic Data: In October, Canada created more than 83,000 jobs. However, gains are coming at a slower pace.

• European and Asian economies:

All major stock markets in Europe and Asia rose, with the positive reaction to the U.S. elections outweighing fears of further restrictions in Europe and the risk of a double-dip recession. 

British equities underperformed, as negotiations with the European Union on post-Brexit trade once again appeared to make little progress, despite indications earlier in the week that a compromise on the controversial issue of fishing rights may soon emerge.

What to watch this week:

• 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

Thank-you for checking out our ClearWater Market Commentary for November 9th, 2020. If you would like to receive the ClearWater Commentary at the start of every week, sign-up for our Newsletter.