ClearWater Market Commentary as of September 24th, 2021

Here is the ClearWater Market Commentary as of September 24th, 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	1.23%
1 Month	-0.65%
YTD	17.03%
1 Year	25.97%

^{As of 2021/09/24- Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
Russell 2000	3.28%	14.13%
CAC 40	2.98%	19.76%
DAX	2.83%	13.43%
Oil($/bbl)	2.70%	52.40%
Dow Jones Industrial	2.44%	13.69%
Nasdaq	2.27%	16.75%
S&P 500	2.24%	18.62%
FTSE 100	2.07%	9.07%
S&P/TSX Composite	1.23%	17.03%
Hang Seng Index	0.45%	-11.10%
Nikkei 225	-0.85%	10.19%
Shanghai Composite	-0.86%	3.16%

^{As of 2021/09/24- Source: www.marketwatch.com}

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

US economy (S&P 500 2.24%):

• The major benchmarks overcame an early sell-off to end the week flat. 
• On Monday the S&P 500 saw its biggest daily drop since May 12.
• This downbeat start to the week was due to several factors. Primarily among them were fears that a possible default by China’s second-largest property developer Evergrande – and the world’s most heavily indebted one – might set off a global financial “contagion” similar to what followed the collapse of Lehman Brothers in September 2008.
• However, stock markets regain much of these losses as news of a restructuring plan for Evergrande, along with a capital injection into the Chinese banking system.
• The other closely watched event of the week was the Federal Reserve’s policy meeting as they announced that they would soon consider tapering the central bank’s purchases of Treasuries and mortgage-backed securities, a move that would reduce some of the downward pressure on longer-term interest rates. Fed Chair Jerome Powell reiterated that he would be looking for continued improvement in the labour market before acting.
• According to the Federal Open Market Committee’s updated summary of economic projections, it is now split that we will see interest rates lift-off between 2022 and 2023.

Canadian markets (S&P/TSX 1.23%):

• Canada’s main stock index concluded its third losing week in a row by giving back some of its recent gains amid concerns out of China about the real estate market and the country’s ban on cryptocurrencies.
• Markets were hit early Friday by China’s decision to declare digital currencies like Bitcoin illegal, which particularly affected the technology sector.
• A positive economic and employment outlook by the US Fed did taper pare losses, however. The fairly bullish outlook for the economy by the fed provided a more positive economic backdrop for markets.
• Prime Minister Trudeau wins a third term in Canada’s snap election but fails to gain a majority.
• Canadian retail sales (Jul.) retreated less than expected (-0.6% m/m versus – 1.2% expected) after last month’s robust 4.2% rebound. July marks the third decline in the previous four months. StatCan’s flash estimate for August calls for retail sales to bounce back 2.1%.

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

European and Asian economies:

• Shares in Europe advanced as optimism about a continuing economic expansion offset concerns about a gradual withdrawal of central bank support.
• However, lingering worries about Chinese property developer Evergrande curbed gains.
• Norway became the first Group of Ten (G10) countries to tighten its monetary policy, with the central bank raising its short-term lending rate by a quarter-point to 0.25% from 0.00%.
• The Bank of England (BoE) kept its key rate unchanged at 0.10%.
• Growth in eurozone activity slowed noticeably in September, and the decline in pace has been attributed to demand peaking in the second quarter, supply chain bottlenecks, and concerns about the spread of the coronavirus.
• Germany headed into a general election Sunday, with results still too close to call.
• Japanese stocks posted losses in a volatile week. Taro Kono is the leading candidate to succeed outgoing Prime Minister Yoshihide Suga as the party leader for the Liberal Democratic Party. This has been seen as a positive as he’s been supportive of additional stimulus measures.
• As expected the Bank of Japan holds rates steady.
• The Organization for Economic Cooperation and Development (OECD) lowered its GDP growth forecast for Asia, which reflects rising inflation and supply chain disruptions.
• Chinese stocks ended the week broadly flat amid the mounting debt crisis surrounding China’s Evergrande Groupe. A series of large cash injections by China’s central bank during the week helped ease worries about a disorderly debt resolution for the developer.
• The company now enters a 3-day grace period, after which it will be considered in default if that period passes without payment.
• Many analysts believe that China’s government will step in to contain the financial fallout ensuing from an Evergrande bankruptcy or default. Moreover, many believe the systemic risk is unlikely as Evergrande’s outstanding debt amounts to a negligible amount of the country’s total banking assets. The company also has many assets it can sell to reduce its debt.

What to watch this week:

• No material data releases in Canada
• US durable goods orders, and personal spending and income data
• US and UK GDP data
• US and Japanese consumer confidence data
• Eurozone inflation data
• German Election
• Japanese retail sales, employment, and industrial production data
• Global Purchasing Manager Indices
• Global Purchasing Manager Indices

• 

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

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