Market Watch Week of Nov 16, 2020

November 23, 2020

Written By: Sid Mohapatra

It was a lacklustre week on Wall Street as investors continue to worry that surging coronavirus
cases and further lockdown restrictions to mitigate outbreaks will cause a slowdown in the
economic recovery. Further, there continues to be heightened uncertainty with regards to
accommodative monetary policy measures by way of COVID-19 related stimulus packages to be
withdrawn by the US Treasury as early as 31st December based on comments by Steve
Mnuchin. This certainly was a catalyst to the mild risk-off tone throughout the week with the S&P
500 losing (0.80)% closing at 3,558. In stark contrast, the TSX gained 200 basis points closing
at 17,017.

On a broader note, we see certain trends emerging in risk markets over the last two weeks
with secular rotation amongst various asset classes and sectors. This has manifested in a tug of
the war between the tech pack and the value stocks, which have continued to remain under the
shadow of positive vaccine developments while being counter-acted with an increase in outbreaks
and looming restrictions/lockdown.

Having said that, we continue to observe cyclicals like Financials and Energy which have lagged
technology stocks and are sensitive to the economy re-engaging have begun to find momentum
and slightly outperform the tech stocks over this brief two-week window. This is similar to what
we have seen south of the border with value or dividend income outperforming growth.

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