Recap: Week Ending April 10, 2015

April 12, 2015

Equity markets caught a strong bid last week, bouncing off well-established lows. To no surprise, the NASDAQ 100 index was the strongest performing of the bunch in the US, gaining 2.46% on the week. On the other hand, the Dow Jones gained 1.66%. The Toronto Stock Exchange Composite Index, TSX, performed well too, gaining 2.41% last week. Once again, gold had a relatively narrow range trading week, closing up Friday 0.47%. Gold remains just over $50 off of its lows for the 2015 year. Unlike gold, crude saw a wide trading range last week, closing up $2.24 or 4.52% Friday. The push higher last week is the fourth week in a row that the energy product has moved higher on a weekly basis.

Markets moved higher on what could be considered a fairly light week in regards to economic releases. Two of the largest events were Wednesday’s US FOMC Minutes as well as Friday’s Canadian Unemployment Rate. Both of these recent events caused once again bullish activity to enter the markets

Wednesday saw the release of the regular US Federal Reserve FOMC Minutes from their most recent meeting. Through the minutes, a sense of conflict appeared to arise among members in regards to an increase in interest rates. “Several” members were noted as June being the first most for a rate hike while “others” believe a rate hike will come must later. The view of a later hike in rates is justified by the members in regards to the impact the strong US Dollar is having on the economy as well as the falling price of oil. It must be noted that even “a couple” of members would like to wait until 2016 for an increase in US interest rates. Despite these conflicting views amongst members, the Fed did restate that they are still data-dependent. Considering the most recent poor performance of nonfarm payrolls in March, the increase in interest rates appears to be further away than many originally believed. Because of this, US stocks caught a bid. The Dow was able to rise 0.2% on the day while the NASDAQ Composite gained 0.8%. Lower interest rates allow more and more people to buy stocks with cheap borrowed money, pushing equities higher. This appeared to set the tone for the rest of the week as markets closed the week off higher on Friday.

The other important data out last week was the Canadian Unemployment rate that was released Friday. The figure for March came in a 6.8% which also happened to be the previous reading, as well as the consensus among economists. The Net change in employment ticker higher from a previous reading of -1K to 28.7K, beating the consensus of 0K. On another positive note, the participation rate among those in the labour force moved higher from a previous reading in February of 65.8% to 65.9% in March. The positive economic data without a doubt sent Canadian equities higher with the TSX climbing 0.41% Friday. The push higher Friday comes as the index is making new highs for the 2015 calendar year. It will be important to watch to see if the TSX can hold up this bid, or if the breach of these new highs will act as a support level for a move on the way down.

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