ClearWater Market Commentary as of October 15th, 2021

Here is the ClearWater Market Commentary as of October 15th, 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	2.51%
1 Month	2.14%
YTD	20.05%
1 Year	27.31%

^{As of 2021/10/15 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Nikkei 225	3.64%	5.92%
WTI Crude (oil)	3.60%	69.50%
CAC 40	2.55%	21.19%
S&P/TSX Composite	2.51%	20.05%
DAX	2.51%	13.62%
Nasdaq	2.18%	15.59%
Hang Seng Index	1.99%	-6.98%
FTSE 100	1.95%	11.97%
S&P 500	1.82%	19.04%
Russell 2000	1.71%	15.01%
Dow Jones Industrial	1.58%	15.32%
Shanghai Composite	-0.55%	2.86%

^{As of 2021/10/15 – Source: www.marketwatch.com}

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

US economy (S&P 500 1.82%):

• Stocks built on the previous week’s gains, helped by some strong economic signals and positive earnings surprises.
• Stocks fell at the start of the week given the recent focus on higher energy prices and continued pressures from supply chain disruptions. Global oil prices continued their climb to their highest level in over three years, pushed higher in part by expectations that utilities and other firms would switch to oil from natural gas due to the supply shortage in Europe.
• Supply chain issues continued to grab headlines in the form of warnings from retailers struggling to fill shelves ahead of the holidays, while Apple scaled back its expectations for iPhone sales due to semiconductor chip shortages.
• Evidence that supply pressures and inflation might be peaking seemed to be a major factor in stocks regaining momentum to end the week. On the supply front, the White House announced measures intended to relieve the congestion at major ports.
• Investors also seemed comforted by evidence that the drag on the economy from the delta variant of the coronavirus was easing. On Thursday, the S&P 500 Index recorded its biggest daily gain since March following news that weekly jobless claims had fallen to 293,000, a new pandemic-era low.

Canadian markets (S&P/TSX 2.51%):

• Strong U.S. earnings and supportive economic data powered North American markets last week.
• Canada’s main stock index closed reached record highs on a broad rally led by the strength of the financial and energy sectors, as the price of oil climbed past US$82 per barrel.
• Positive sentiment out of the U.S. as a contributing factor as well Canadian manufacturing sales rising through the Summer. And although earnings growth likely peaked during the Summer, economic activity remains robust still in the middle of October. Worries about inflation seemed to have taken a back seat for the time being.
• The S&P/TSX composite index closed up 108.16 points to 20,928.10 after reaching an intraday high of 20,969.36. 
• Positive signs from U.S. banks, such as improving loan loss provisions, may be echoed when Canadian banks report results next month.
• The Canadian dollar traded for 80.78 cents US compared with 80.83 cents US on Thursday.

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

European and Asian economies:

• Shares in Europe rallied on optimism about the continuing economic recovery and strong corporate earnings.
• Industrial production in the eurozone fell in August due to supply chain bottlenecks and slowing global trade.
• UK gross domestic product (GDP) in August month over month as the hospitality industry benefited from the first full month of reopening.
• Although the UK economy has recovered to near the levels last seen before the downturn caused by the coronavirus pandemic, GDP is still about 5% less than it would have been if it had continued to grow at its pre-pandemic pace.
• UK employers added 207,000 staff to their payrolls in September, with job numbers returning to pre-pandemic levels.
• German institutes cut growth forecasts for economic growth in 2021 to 2.4% from a previous estimate of 3.7%, as supply chain bottlenecks curb manufacturing output.
• However, they said economic conditions would improve toward year-end and raised their forecast for 2022 growth significantly to 4.8% from 3.9%, as the impact of the coronavirus pandemic eases.
• Japan’s stock market returns were positive during a week that saw Japan’s powerful lower house of parliament dissolved, setting the stage for an October 31 general election.
• Investors gained reassurances that new Prime Minister Fumio Kishida is not planning to veer too far away from the policies of his predecessors and does not intend to raise the country’s capital gains tax, a subject that previously spooked markets.
• New PM Kishida retreats on plans to raise capital gains tax. Kishida said that he does not plan to change the tax for the time being.
• The new prime minister also provided some detail on the economic package worth tens of trillions of yen that he has pledged to compile after the October 31 general election. It will include support for the domestic development and production of vaccines and for building a chipmaking plant in Japan to bolster supply chains for critical components, such as semiconductors.
• Chinese markets ended nearly unchanged ahead of next week’s quarterly GDP report.
• Investors have been spooked by a deepening energy crisis as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs.
• Oil and natural gas prices, which have also soared to multiyear highs, have also sent jitters across China, a net energy importer.
• Several Chinese energy companies are in advanced talks with U.S. exporters to secure long-term liquefied natural gas supplies, underscoring the urgency of the crisis as natural gas prices in Asia have jumped more than fivefold this year and raised fears of power shortages this winter.
• Despite continued concerns about China’s property sector, a central bank official said that the spillover effect of China Evergrande Group’s debt problems on the banking system is controllable and that risk exposures are not big.
• Meanwhile, cash-strapped property giant Evergrande owes the equivalent of USD 28 million for land in the northeastern city of Changchun it bought in June.
• Evergrande, which is shouldering more than USD 300 billion in liabilities, failed to pay nearly USD 150 million worth of coupons on three bonds due Monday after missing two other bond payments in September.
• Investors are now awaiting several key dates when Chinese property companies are due to make payments on their debt.

What to watch this week:

• Bank of Canada Outlook Survey (Q3)
• Canadian, UK, and Chinese retail sales data
• US housing data
• US and Chinese industrial production data
• US Federal Reserve’s Beige Book
• Eurozone and UK consumer confidence data
• Japanese trade data
• Chinese GDP and fixed asset investment data
• Global inflation data and Purchasing Manager Indices
• 76 S&P 500 and 5 S&P/TSX companies report earnings

• 

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

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