ClearWater Market Commentary as of October 28th, 2022

Here is the ClearWater Market Commentary as of October 28th, 2022:

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 Day3.24%
1 Month5.57%
1 Year-7.44%

As of 2022/10/28 – Source:

Index PerformancesLast 5 DaysYTD
Dow Jones Industrial5.70%-9.60%
Russell 20005.53%-18.73%
S&P 5004.00%-18.20%
WTI Crude (oil)3.70%17.30%
S&P/TSX Composite2.94%-8.31%
Nikkei 2251.75%-5.85%
FTSE 1000.84%-5.76%
Shanghai Composite-2.55%-20.34%
Hang Seng Index-3.64%-36.90%
CAC 40-13.18%-13.51%

As of 2022/10/28- Source:

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

US economy (S&P 500 4.70%):

  • Stocks rose but offered widely divergent returns for the week, as investors reacted to a busy calendar of third-quarter earnings reports. 
  • Energy and other industrial economy stocks handily outperformed growth shares, with the latter weighed down by steep declines in several mega-cap technology and internet-related stocks, including Microsoft,, Alphabet (parent of Google), and especially Meta Platforms (parent of Facebook), following earnings misses and lowered outlooks. 
  • Hopes that the Federal Reserve might slow its pace of rate increases seemed to be a driver of positive sentiment during the week. Stocks rose after the Bank of Canada’s unexpected decision on Wednesday to raise rates by only 0.50% instead of the 0.75% widely anticipated, leading to hopes that the Fed might follow its example.
  • Worries that the Fed’s aggressive rate hikes and the consequent steep rise in the U.S. dollar might spark instability in the global financial system have led to speculation that the Fed might soon dial back its pace of rate hikes or even pause them.
  • The week’s economic data offered conflicting signals on how much room the Fed has to maneuver. S&P Global’s gauge of U.S. manufacturing activity fell into contraction territory for the first time since June 2020, while its service sector gauge also surprised on the downside and indicated an even sharper slowdown in activity.
  • The Conference Board’s index of consumer confidence fell for the first time in three months, reflecting persistent inflation fears, but weekly jobless claims surprised on the downside.
  • The Commerce Department released its first estimate of gross domestic product (GDP) growth in the third quarter, which showed the economy expanding at an annualized rate of 2.6%, above consensus estimates of around 2.4% and the first positive reading this year. 
  • Resilient consumer spending and business investment, along with increased government outlays, helped offset a steep decline in residential investment—perhaps the first clear victim of the Fed’s rate hikes. Pending home sales fell 10.2% in September, their sharpest monthly drop since the early days of the pandemic.

Canadian markets (S&P/TSX 1.32%):

  • Canada’s main stock index was up for the sixth day in a row despite declines in the base metals, telecom and battery metals indexes
  • The Bank of Canada (BoC) raised the overnight rate by a less-than-expected 50 bps to 3.75%. Governor Tiff Macklem noted they are closer to the end of the tightening phase, but more increases are needed.
  • GDP data released Friday didn’t bring any major surprises, especially after the Bank of Canada’s revised estimates.
  • The Canadian dollar traded for 73.45 cents US,compared with 73.82 cents US on Thursday.
  • The December crude oil contract was down US$1.18 at US$87.90 per barrel and the December natural gas contract was down 19 cents at US$5.68 per mmBTU.

Performance 2022: S&P 500 Sectors   

Forward P/E Ratios: S&P 400/500/600 Sectors

European and Asian economies:

  • Shares in Europe rose strongly on hopes that central banks might slow the pace of interest rate increases. 
  • The European Central Bank (ECB) raised its key interest rates for a second consecutive time by 0.75 percentage point and said it may have to raise them further to curb inflation that is still “far too high.” The deposit rate now stands at 1.5%, its highest level since 2009.
  • However, markets reduced their bets on higher rates and the euro fell below parity against the U.S. dollar on hints in the policy statement that the ECB’s approach may have begun to shift and that the size of the next hike could be smaller. 
  • The central bank also noted that “substantial progress” had already been made in “withdrawing monetary policy accommodation,” while ECB President Christine Lagarde emphasized that a recession scenario was “looming much more on the horizon.”
  • Business activity in the eurozone contracted for a fourth month running in October, indicating that the economy is likely entering a recession. An early reading of S&P Global’s composite purchasing managers’ index (PMI), a measure of activity in the private sector, dropped to a 23-month low of 47.1 from 48.1 in September. A PMI reading below 50 indicates a contraction.
  • Official early estimates showed Germany’s economy expanded unexpectedly in the third quarter, while growth slowed in France and Spain. German GDP increased by a seasonally adjusted 0.3% sequentially, compared with 0.1% in the previous quarter. In France, GDP grew 0.2%, compared with 0.5% in the second quarter. Spain’s economy expanded 0.2% in the third quarter, a sharp slowdown from the 1.5% expansion registered in the preceding three-month period. Early estimates showed inflation in Germany, France, Spain, and Italy was higher than expected in October.
  • Business activity in the UK shrank for a third consecutive month in October. An early reading of S&P Global’s composite PMI dropped to a 21-month low of 47.2 from 49.1 in September.
  • Members of Parliament elected former UK finance minister Rishi Sunak as prime minister. Sunak replaces Liz Truss, who stepped down after a proposed change in fiscal policy resulted in financial market turmoil that eroded confidence in her administration.
  • Japanese equities finished higher for the week. Local markets rose early in the week, amid hopes that the U.S. central bank may adopt a less aggressive policy stance than previously anticipated. 
  • Late in the week, however, local markets lost some ground as investors digested domestic earnings reports and the announcement by Prime Minister Fumio Kishida of a JPY 71.6 trillion government economic stimulus package.
  • The yen started the week on a softer trend, despite signs that the government was ramping up its intervention strategy. 
  • On Wednesday, the Bank of Japan (BoJ) increased its purchases of Japanese government bonds (JGBs), adding a further JPY 100 billion in 10- to 25-year debt and JPY 50 billion in longer-dated purchases. This increase was not unexpected, but it nevertheless prompted sharp gains at the long end of the yield curve, where yields fell sharply to their lowest levels since mid-October. 
  • Notably, the Bank of Japan wrapped up its monetary policy meeting on Friday, announcing that it would hold interest rates at ultra-low levels (-0.1% for short-term rates, and 0% for 10-year government yields), as widely anticipated. However, it raised its target for core consumer inflation to 2.9% for the fiscal year ending March 2023 and 1.6% the following year.
  • In other reports, consumer prices in the Tokyo region, viewed as a key indicator of national trends, rose 3.5% year-over-year in October, exceeding expectations for an increase of 3.2%, and up from 2.8% in September. Core CPI, which excludes volatile food prices, climbed 3.4%, which also exceeded forecasts of 3.1%, and was up from 2.8% the previous month.
  • The Ministry of Internal Affairs and Communications also reported that the unemployment rate in Japan came in at a seasonally adjusted 2.6% in September, exceeding expectations for 2.5%. The workforce participation rate was 63.0%, again exceeding expectations of 62.9%.
  • China’s stock markets pulled back, as investor sentiment was dampened by new COVID-related lockdowns in several parts of China. Several Chinese cities doubled down on COVID-19 curbs after the country reported three straight days of more than 1,000 new cases nationwide. Data also showed that profits at China’s industrial firms declined at a faster pace in September. 
  • Reports emerged that major Chinese state-owned banks sold U.S. dollars in both onshore and offshore markets during the week after the yuan’s recent slide. 
  • Growth worries rattled investors despite better-than-expected GDP data reported for the third quarter during. China’s economy expanded 3.9% in July-September from a year earlier, faster than the 0.4% growth in the second quarter.
  • Retail sales grew 2.5%, missing forecasts for a 3.3% increase and easing from August’s 5.4% pace. Exports grew 5.7% from a year earlier in September, beating expectations but coming in at the slowest pace since April. Imports rose a feeble 0.3%, undershooting estimates for 1.0% growth.
  • After the closing of the Communist Party’s 20th Congress, the People’s Bank of China and the State Administration of Foreign Exchange issued a joint statement that they would maintain the healthy development of stock and bond markets.

What to watch this week:

  • US Federal Reserve Policy Announcement
  • Bank of England Policy Announcement
  • Reserve Bank of Australia Policy Announcement
  • Canada Federal Fiscal Update
  • Canadian trade and employment data
  • US ISM Purchasing Manager Indices and employment data
  • Japanese industrial production, retail sales and consumer confidence data
  • Eurozone GDP, inflation and employment data
  • Global PMIs
  • 168 S&P 500 and 88 S&P/TSX companies report earnings

Sources:,, Barron’, and

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