Weekly Market Update (December 11 – December 15, 2017)

December 20, 2017

American markets ended the week higher overall, with all major indices (S&P 500, DIJA, NASDAQ), once again hitting record highs. Tech stocks have lead the overall leads for the year, gaining 38% in the sector total – as investors have high hopes for future earnings potential. Last week, large-cap stocks hit new highs in anticipation of the potential impacts of the government’s tax reform bill. Index in the U.S. were supported mainly by Disney’s acquisition of 21st Century Fox for $52B, with energy stocks also adding support early in the week after oil prices rose. Focus was on the Federal Reserves decision on interest rates this week, which it announced it would raise the target rate by 0.25% to 1.25% – 1.50%. Following the third rate hike this year, the Fed continued to upgrade the U.S. economy, following strong employment data and U.S. GDP growth – while raising concerns of inflation threats. The USD traded the week down against a basket of other major currencies, after the inflation comments by the Federal Reserve. President Trump also reaffirmed his platform point to increase infrastructure spending – saying he would pump $1 Trillion into new spending into the U.S. economy.

Canadian markets followed their U.S. counterparts, with the TSX hitting a new all-time high – before settling back down at the end of the week. Markets were supported by the progress of the U.S. tax reform, with the materials sector leading Canadian gains as metals prices increased. Energy stocks led the losses in the Canadian markets, as oil prices lost value from the previous two-year high – following speculation that OPEC’s supply cut would not go on for as long as expected. The BoC kept interest rates at 1.00%, after the 0.25% raise mid-year in 2017. The central bank mentioned that higher rates would be required soon, after employment stats improved and inflation was where they wanted it to be.

European markets started the week stronger, before receding back to losses for the week. Similarly to Canadian markets, the anticipation surrounding the U.S. tax reform policy helped support the initial bullish run. UK’s FTSE 100 recorded further gains for the week, after the UK agreed to a Brexit deal with the EU – while most other EU indices recorded losses. The BoE (Bank of England), kept its key benchmark rate unchanged, after raising its bank lending rate in November, for the first time in 10 years. The current bank lending rate is still sitting at 0.50%. Japanese markets posted mixed results, with the Nikkei 225 ending the week down – closing at 22,553. This was a recorded loss of 1.13% for the index, while it’s YTD return still remained very positive at around 18%.

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