Recap: Week Ending July 17, 2015

July 19, 2015

Markets across the board traded higher last week with the NASDAQ leading the charge. The NASDAQ 100 index closed Friday at 4,661.60, marking a weekly gain of 5.46%, one of the largest the index has seen in recent memory. The Dow Jones Industrial Average was the worst performing index amongst the US indices, closing Friday at 18,086.45, marking a weekly gain of 1.84%. The move higher in equities was a result of relatively strong US corporate earnings paired with a bullish sentiment in regards to the situation in Greece. Last week Google reported earnings on Friday, which provided a big boost to the NASDAQ, which had ripple effects on the broader market. The company reported an 11% rise in revenues to $17.73 billion. With this being said, Google did note that currency fluctuations hampered its revenues by roughly 7%. The earnings caused a 16% rally in Google’s C class stock Friday, propelling the NASDAQ 100 higher by 1.45% on Friday alone. Friday was not the only day that the market saw upside. Markets rallied early on in the week as positive news in regards to a Greek deal had been reached. It appears that a deal has been reached; however, there are still talks in Europe in regards to the future of the EU and Greek’s future in regards to its ability to pay off its new debt load. This somewhat positive news sent markets back to their area of acceptance, with the Dow closing the week at roughly the midpoint of its horizontal chop that it has developed since March. It appears now that US markets have shifted their attention back to focusing on a rise in interest rates that will undoubtedly happen sooner rather than later.

As talks of a rise in rates is the main buzz in the United States, the Bank of Canada, or BoC, announced last week that they would be lowering their target interest rate from 0.75% to 0.50% in an effort to assist the economy. Recently many on the street are slowly referring to the Canadian economy as being in a state of recession as it has seen two quarterly retracements, which by textbook terms is considered a rescission. Many are pointing to the decline in the price of oil as a direct result of the so-called recession. The decline in oil has undoubtedly hindered the Canadian GDP, which, as a result, has weakened the Canadian currency. The fall in the interest rate pushed the Canadian Dollar even lower against other currencies, mainly the US currency. Last week the Canadian Dollar fell roughly 2 cents or 2.33% to close the week at 0.77USD. Currently, the CAD is sitting at yearly lows and is approaching the lows that it settled at in 2009. On the flipside, the Canadian equity benchmark, the Toronto Stock Exchange Composite Index, also known as the TSX, did climb last week. The TSX settled the week out at 14,642.84, marking a gain of 1.61%. The move higher in the Canadian index is its first weekly push higher in two weeks. Currently, the TSX has been trending to the downside after peaking in mid-April 2015 at roughly 15,500. As it currently sits, the TSX is about 260 points below its 50 day moving average, a technical indicator that it has found resistance at it in the past. The move lower in interest rates may be able to help prop up the falling index as investors will be able to borrow at cheaper rates, sending more money into the market and eventually the economy.

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