Weekly Market Update (February 11th – February 15th, 2019)
Written By: Samuel Buddy Wiseman-Barker
The market saw modest gains throughout the week with the help of resumption of US-China trade talks next week. Trump’s signing of a bill to delay the government shutdown also played a large factor in the easing of investors worries. The Dow Jones Industrial Average saw a 3.13% gain, S&P 500 was up 2.53%, and the TSX made a gain of 1.31%. Unusually weak US retail sales were generally perceived as short-term, overshadowed by positive trade outlooks. The energy sector led the TSX in conjunction with an increase in WTI crude prices. The Canadian technology sector was also buoyed by the strong earnings reported by Constellation Software. Looking ahead, this week’s earnings reports will include 42 companies traded on the TSX, including Magna International, Royal Bank of Canada, Loblaws, and Hydro One.
Oil helped boost the Canadian dollar early on in the week, however poor manufacturing numbers quickly reversed the majority of gains. The aforementioned numbers also helped wipeout weekly gains for Canadian 3-year and 10-year treasury bonds. Fed Chair Jerome Powell stated the Federal Reserve would remain patient with interest rate increases resulting in favorable USD impacts. Globally, the Euro continues to struggle, hitting new three-month lows this week, heavily influenced by a stagnating German economy.
Foreign investors dumped a record amount of Canadian debt in 2018, selling off C$24.8 billion worth of Canadian bonds in December alone. Although a large portion of this can be traced back to recent corporate bond retirements as well as a slowdown in issuances due to higher central bank rates. Equity markets didn’t follow a similar trend, with C$27.5 billion inflows throughout the year with C$6.7 billion in December alone. Canadian treasury bonds continue to fall as investors have regained their appetite for risk in time for the end of 1st quarter 2019.