Recap: Week Ending May 6, 2016

May 9, 2016

North American equities saw their second consecutive week of losses, propelled by poor performances in the technology and small-cap markets. The Technology-heavy NASDAQ Composite closed the week down 0.99%, in part due to sub-par performance in the biotechnology sector. The volatile small-cap Russell 2000 Index closed the week down 1.42%, with a slight rally from its Thursday bottom. The Dow Jones fell and the S&P 500 Indices fell 0.19% and 0.40% respectively, with their Friday rallies paring some of the losses experienced earlier in the week. However, the American Markets fared much better than their European and Asian counterparts: the FTSE 100 was down 1.79%, not much better than the 1.86% loss by the DAX. Asian equity markets were the worst off, with the Nikkei 225 losing 3.35% and the Hang Seng Index down a significant 4.54%, putting it down over 27% in the last year. The bearish sentiment in Asian markets is highly prevalent; the Nikkei 225 is down over 17% since last year, and the Shanghai Composite Index has fallen an alarming 45% since its June 2015 high. Oil markets were lower, in part because of the lower Canadian supply. WTI crude settling down 2.74% at $44.66 per barrel, trading very close to Brent crude, its European counterpart. Gold prices saw strong losses early in the week, but a Friday surge saw the commodity settle up $3.86 at $1294.90. The American economy saw its trade deficit decrease by $6.6B, a strong sign, beating the consensus by $1.4B. Global markets this week will be listening to the Bank of England’s Interest Rate decision on Thursday, which is expected to remain unchanged.

In Canada, the Toronto Stock Exchange Composite Index, or TSX, fell 1.79% over the week, closing at 13701 to end the week. A major Catalyst in TSX performance is the Fort McMurray wildfires, which have dealt a huge blow to the operations of companies working in the Canadian Oil Sands. The wildfires are the largest in Alberta history, currently covering 1600 Square Kilometers. Multiple projects have been reportedly shut down, with the Canadian Crude output falling by an estimated 1 Million Barrels Per Day, amounting to 40% of the area’s output. Regarding the economic calendar, Canadian Exports and Net Exports decreased during the month of March, with Exports falling $2B from the previous month. The large decrease is the 2nd consecutive decrease in Exports, which may cause concern for Canadian investors moving forward. These statistics, in combination with the lower oil and Fort McMurray incident, saw the Canadian dollar settle 2.28 cents lower at 0.7737 cents on the US Dollar.

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