ClearWater Market Commentary – September 25th

Here is the ClearWater Market Commentary as of September 25th 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	1.67%
1 Month	-1.61%
YTD	-4.77%
1 Year	-2.46%

As of 2020/09/25 – Source: www.marketwatch.com
 

Index Performances	Last 5 Days	YTD
Nasdaq	1.11%	21.63%
S&P 500	-0,63%	2.09%
Nikkei 225	-0.67%	-1.91%
S&P/TSX Composite	-0.82%	-5.85%
Dow Jones Industrial	-1.75%	-4.78%
WTI Crude (oil)	-2.27%	-34.59%
FTSE 100	-2.74%	-22.54%
Shanghai Composite	-3.56%	5.55%
Russell 2000	-4.03%	-11.60%
Gold	-4.74%	22.65%
DAX	-4.93%	-5.89%
Hang Seng Index	-4.99%	-17.57%
CAC 40	-4.99%	-20.88%

As of 2020/09/25 – Sources: Marketwatch & Mackenzie Investments

Last week’s and next week’s key economic events:
The resurgence of COVID-19, the uncertainty related to the U.S. elections, and the lack of a new stimulus are driving down stock market indices.

Stock markets fell this week as COVID-19 infection rates accelerated in several countries, leading to tighter restrictions in some countries and creating headwinds for economic growth.

In addition, the likelihood of a new U.S. fiscal stimulus faded amid growing concern about an unknown or chaotic U.S. election outcome. 

On the other hand, several U.S. Federal Reserve officials, including President Jerome Powell, have stressed the urgent need for additional stimulus to stimulate the world’s largest economy. The ability of Democrats and Republicans to agree on another spending bill before the election, or even this year, seemed even weaker given the looming confrontation in the Senate over the process of replacing Justice Ruth Bader Ginsburg on the Supreme Court. 

As a result: Increased investor anxiety drove the US dollar up and lowered bond rates and gold (-4.74%). In addition, worries about global oil demand caused oil to fall (-2.27%).                        

Historically, the wider the time horizon, the lower the probability of equity losses!

• US economy (S&P 500: -0.63%):
• The S&P500’s decline briefly erased its 2020 gains and hit the 10% “correction” level. However, it avoided this threshold before the end of the week thanks to an excellent Friday.
  
  Stock market sectors: The decline was led by the energy and materials sectors as commodity prices declined. The financial sector was also particularly weak after the publication of a report by the International Consortium of Investigative Journalists that highlighted how several global banks have defied the crackdown on money laundering.
  
  Economic Data: Economic news during the week was mixed. On the positive side, home sales surged. However, initial weekly unemployment claims were slightly higher than expected, indicating a slowing of the labor market recovery. 

U.S. stock market valuations as of September 25th, 2020:

• Canadian markets (S&P/TSX: -0.82%):

Lower oil and gold prices weighed heavily on the Canadian stock market index, with energy and materials being among the main sectors down. 

Oil (–2.27%): In addition to demand problems, oil stocks faced supply pressures due to the imminent return of Libyan production to world markets after a temporary truce was reached between the main parts of the war-torn country. 

Gold (-4.74%): Gold prices fell to a two-month low as the rise of the US dollar negatively affected its attractiveness. 

Stock market sectors: The relatively small health care sector recorded the largest decline, led by the marijuana companies, after Aurora Cannabis reported disappointing quarterly revenues. Consumer staples and technology led the growth sectors.

Justin Trudeau’s Speech from the Throne: Canada’s stock markets remained largely unchanged in response to the federal government’s Speech from the Throne, which promised “whatever it takes” to support economic recovery from COVID-19.

Watch for this week:

Canada:

• Monthly GDP – month of July

United States:

• First debate between Donald Trump and Joe Biden – Tuesday 
• U.S. employment report (job creation and unemployment rate) – month of September
• Construction expenditures – month of August 
• Univ. of Michigan Consumer Sentiment Index – month of August
• Personal Income and Expenses – month of August

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

Thank-you for checking out our ClearWater Market Commentary for September 25th, 2020. If you would like to receive the ClearWater Commentary at the start of every week, sign-up for our Newsletter.