ClearWater Market Commentary as of October 22nd, 2021

Here is the ClearWater Market Commentary as of October 22nd, 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	1.38%
1 Month	3.99%
YTD	21.70%
1 Year	30.13%

^{As of 2021/10/22 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Hang Seng Index	2.82%	-4.06%
WTI Crude (oil)	2.30%	73.50%
S&P 500	1.60%	21.00%
S&P/TSX Composite	1.38%	21.70%
Nasdaq	1.30%	17.10%
Dow Jones Industrial	1.26%	16.57%
Russell 2000	0.89%	16.02%
CAC 40	0.88%	21.08%
Shanghai Composite	0.65%	3.34%
DAX	0.55%	13.61%
FTSE 100	0.02%	11.65%
Nikkei 225	-0.75%	4.89%

^{As of 2021/10/22 – Source: www.marketwatch.com}

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

US economy (S&P 500 1.60%):

• All the main indices moved to record highs, seemingly helped by a series of positive earnings surprises. Further reflecting the strong investor sentiment.
• The Volatility Index (VIX) also fell to its lowest level since the beginning of the pandemic.
• Investors appeared to be paying close attention to how higher energy and raw materials prices were affecting both third-quarter profits and future guidance, but favorable earnings momentum helped counter elevated inflation concerns.
• Hopes for additional fiscal stimulus also appeared to bolster sentiment. Negotiations continued between Democrats in the U.S. Senate over the size of the Biden administration’s proposed social infrastructure bill.
• Investors seemed cheered by reports that the Democratic leaders were also prepared to scrap tax rate increases to spare the deal. At a CNN town hall event on Thursday evening, President Biden said that his party was close to striking a deal and that increased corporate taxes were unlikely to be included in the legislation.
• Overall, the week’s economic data were mixed. This was especially true in the housing sector, where both housing starts and building permits came in well below expectations on Tuesday, while existing home sales, reported Thursday, jumped unexpectedly to their highest level since January. Weekly and continuing jobless claims fell more than consensus expectations and reached new pandemic-era lows.

Canadian markets (S&P/TSX 1.38%):

• Canada’s main stock index eked out another record high on Friday as losses in the technology sector were offset by gains in the energy sector.
• The energy sector was the best performer as the price of crude oil hit US$84 a barrel on Friday after a brief sell-off earlier this week. Canadian energy companies are expected to generate a lot of free cash flow at these commodity prices.
• However, gains in energy were somewhat offset by losses on the technology side. This can be partially attributed to disappointing quarterly results from U.S. tech giants Intel Corporation and Snap Inc.

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

European and Asian economies:

• Shares in Europe rose as optimism about corporate earnings season overcame worries about the potential risks if central banks tighten monetary policy as economic growth loses momentum.
• UK inflation slows year over year but is still well above the Bank of England’s 2% target. Hints have been made that the November rate move is possible.
• Eurozone business activity slowed for a third consecutive month in October, amid increasing supply-chain bottlenecks and ongoing coronavirus-related disruptions.
• Japan’s stock markets registered losses for the week. However, the Japanese government will introduce further stimulus measures.
• Latest inflation data shows a small increase, a sign that rising energy and raw material costs are gradually pushing up inflation. This however will unlikely affect the Bank of Japan’s monetary easing stance.
• China’s stock markets advanced after officials sought to calm fears about the property sector and China Evergrande Group made a delayed coupon payment.
• Chinese stocks got off to a weak start though after data released Monday
• showed that the country’s gross domestic product (GDP) rose a lower-than-expected.
• Other data released in the week showed that new home prices stalled in
• September for the first time in six years, according to Bloomberg, raising
• expectations of policy support after the property sector endured more negative headlines.
• Credit agencies continued to downgrade ratings on several developers amid fears of a liquidity crunch resulting from a property sector slowdown and slower economic growth.
• On the energy front, Chinese authorities sought to allay a growing energy crunch saying that it would “guide coal prices back to a reasonable level. China is the world’s biggest producer and consumer of coal, viewed as a leading economic indicator since it is used to power about 60% of the country’s power plants.

What to watch this week:

• Canada, Europe, and Japan monetary policy announcements
• Canadian, US and Eurozone GDP data
• US wage, durable goods, personal spending and income data
• Eurozone inflation, money supply, and consumer confidence data
• Japanese retail sales, industrial production, and employment data
• 164 S&P 500 and 38 S&P/TSX companies report earnings

• 

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

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