Weekly Market Update March 18-March 22

Written By: Samuel Buddy-Wiseman Barker & Steven A. Klos

Major indices across North America experienced a volatile week, eventually closing lower on Friday. The TSX is down 0.3%, S&P 500 down 0.8%, and the Dow Jones Industrial Average lost 1.34% as well. Investors seem to be worried about future economic growth. Not all sectors were down, with technology shares pushing up all week. The Federal Reserve System has expressed that they will be holding back short-term rate hikes with concerns regarding global growth.

The yield curve between US 3-month and 10-year treasury bills inverted for the first time since 2007. This means that long-term interest rates have a lower yield than short-term interest rates on debt instruments of the same credit quality. This sprung fear on millions of investors, as it is believed to be a major indicator in predicting recessions. You can read more about this topic in this week’s story of interest. The Canadian economy is showing strong signs of weakness, including low inflation and weak retail sales. Canadian inflation was just 1.5%, well below the 2% target the Bank of Canada had planned. This is pointing towards a large stall in the first quarter of 2019. Retail sales were down in January for the third straight month.

Crude oil saw a strong week, with WTI futures trading above $60 for a large portion of the week. The strength of oil prices is believed to be critical going forward for the Canadian economy. Outlooks are positive as US oil exports hit record levels, up 140% since the 2008 financial crisis. Nonetheless, there is a large amount of uncertainty as the Organization of Petroleum Exporting Countries is still indecisive on future plans.