Market Watch

Written by: Sid Mohapatra

Risk markets in Canada remain mixed this week. We witnessed relative strength in the energy space, but the markets were weighed down by the underlying weakness in consumer and healthcare stocks. US markets continue to deal with uncertainty over incremental stimulus measures as well as the slowdown in the economic rebound, which are reflecting in the slower pace of job creation. BOC left their rate decision unchanged and a relatively neutral outlook highlighting both upsides as well as downside risks to the Canadian economy. Although economic growth has lost some steam, the prospects of a strong rebound in economic activity are promising over the next year.

Canadian authorities have provided colour on rolling out the vaccine given that Pfizer has been approved. This is a catalyst to accelerate economic growth and lay the foundation of a robust model for recapturing lost spending over the last year. Further, a year from now the economy will be very close to pre-COVID levels of activity with limited lockdown restrictions and a strong undercurrent of pent-up consumer demand.

These expectations have pushed the TSX to nine-month highs and the US markets reach record highs. The TSX closed at 17,548 eking out a 0.2% gain while the YTD return in a respectable 2.8%. On the other side of the border, US markets remain slightly better offered to shed 1% with the SP 500 closing at 3,663, which is still up a whopping 13.4% for the year.