Recap: Week Ending October 24, 2014

October 26, 2014

Equity markets across the globe moved sharply higher last week as a bottom appears to have formed in major indexes across the globe. The largest gainer on the week was the NASDAQ 100 which rallied almost 6% for the week. In recent weeks a sell-off was seen across equities with the Toronto Stock Exchange, TSX, being one of the weakest of the bunch falling 10%. It appears that many have found value in stocks at these lower prices, causing a strong bid in the market. The bottom comes as the North American earnings calendar is just ramping up. Many companies are expected to report earnings in the upcoming week. However, last week saw a disappointment in the release of Amazon’s earnings, however, both General Motors and Caterpillar reported better than expected results, pushing both stocks higher. It must be noted that many companies still have to report earnings, giving many a bullish outlook on the markets. This notion comes as the Dow Jones Industrial Average has rallied roughly 6% from the lows it made on October 15 without the full effect of US earnings.

The markets were rocked by news out of both Ottawa and New York. A shooter, which appears to be acting alone, killed a soldier standing guard in Ottawa who later went on to target members of parliament in Ottawa before being killed. This news rocked both US and Canadian markets Wednesday sending both lower on the fear the shooter may have ties to the ever expanding ISIS state. Further findings stated that the shooter was acting on his own; this news was still not good, however, provided some calm to markets. An emergency room doctor in New York City was emitted to quarantine after it was determined that he had contracted Ebola after providing medical assistance in Africa. This news flash sent shivers across markets in the US overnight as many feared the unknown about Ebola in the United States largest city. With this being said, it appears that the US has made considerable improvements to their methods of treating Ebola with the dramatic improvements of two nurses who attracted the disease in Texas. This news did not hold markets down long Thursday with equities closing the day well bid into highs. The past week may have seen extreme upside; however, the economic calendar was relatively light. It appears that much of buying was seen based on lower prices as many sought ‘deals’ at lower prices.

The upcoming week appears as though it may be one the busiest weeks of the year with market moving economic data being released each day. Monday markets will open up the results of the European Bank Stress Test. Tuesday will see the release of US Durable Goods Orders for September as well as Consumer Confidence for the month of October. The consensus is 0.6% and 87 respectively. Wednesday will be the most important day by far with the release of the US Federal Reserve Interest Rate Decision, which is expected to remain between 0 – 0.25%. The US Central Bank will also release the pace of the bond-buying program known as Quantitative Easing, that is expected to end very soon if not at this meeting. The important data continues Thursday with the release of US GDP for the third quarter the annualized figure is expected to come in at 3% vs. the previous reading of 4.6%. The week will close off with the Canadian GDP for August, which is expected to come in at 0.1%, slightly above the previous reading of 0%. Friday will also see the release of the Reuters/Michigan Consumer Sentiment Index, which has a consensus of 86.4 and a previous reading of 84.6.

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