A recap of last week s top economic news and what s to come.

Transcription

1 AGF INVESTMENTS September 5, 2017 A recap of last week s top economic news and what s to come. WEEKLY MARKET REVIEW CANADA REPORTS STRONG GDP GROWTH Canada s economy closed out the second quarter growing at a six-year high, as GDP rose 0.3% in June. 14 of 20 major industries expanded during the month, with goods-producing industries leading the way. The strong month equated to Q2 growth of 4.5% annualized, supported by rising confidence, stability in energy prices and continued strength in the jobs market. This led to a 4.6% increase in household spending during the period. Following a strong first quarter of 3.7% growth, Canadian GDP is on pace to advance more than 3.0% in U.S. EMPLOYMENT DISAPPOINTS U.S. nonfarm payrolls underwhelmed in August with 156,000 jobs added during the month. The prior two months were also revised down by a total of 41,000. Manufacturing and construction posted strong employment, while services sectors lagged. As a result of the weak report, the unemployment rate rose to 4.4%, up slightly from the prior month though still close to full employment levels. Average hourly earnings increased 0.1% in August and were unchanged year over year at 2.5%. Weekly hours worked pulled back to 34.4 during the month, though still 1.9% higher than a year earlier. EUROZONE REMAINS STRONG AHEAD OF ECB MEETING Eurozone inflation reached a four-month high of 1.5% annualized in August, up 0.2% from the prior period. Core inflation was unchanged at 1.2% annualized. The eurozone s jobless rate held unchanged at 9.1% as well. Consumer confidence rose to a new cycle high despite German optimism fading due to a weakening auto sector. This latest economic data should be viewed favourably ahead of the European Central Bank s (ECB) meeting on September 7 th where it is expected some clarity will be provided on phasing out quantitative easing, which is currently set to expire in December. 1

2 OTHER ECONOMIC NEWS A second estimate of Q2 GDP growth in the U.S. was revised higher to 3.0% annualized, a strong improvement from initial reports of 2.6%. Upward revisions in consumer spending and business investment more than offset lessened government spending. Supportive of growth into the second half of 2017, August s measure of the Conference Board s Consumer Confidence Index rose to its second-highest level since December Consumers remain optimistic for both current and future conditions despite uncertainty in Washington. Eurozone manufacturing activity remained unchanged and well within expansion territory as August s PMI measured Within the region, U.K. manufacturing surprisingly strengthened to 56.9 amidst futile Brexit negotiations. China s manufacturing PMI advanced to 51.7 in August as industrial output defied a slowdown in the economy. The U.S. ISM Manufacturing Index also advanced with a strong gain of 2.5 points in August, to WHAT S TO COME CENTRAL BANKS MEET The Bank of Canada will meet on Wednesday with Bloomberg currently predicting a coin-flip chance of a 25 basis points interest rate hike. Later in the week, Canadian jobs data for August will be reported. The ECB also meets this week. While no interest rate changes are expected, market participants will closely watch for direction on quantitative easing plans in the months ahead. Sources: BMO Economics, Ned Davis Research, TD Economics, Strategas as of September 1,

3 Return (% ) Annualized Return (% ) CANADIAN EQUITY INDEXES ($CDN) Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low S&P/TSX Composite PR Index 15, ,943 14,319 S&P/TSX Composite TR Index 50, ,697 46,048 Energy TR 3, ,875 3,495 Materials TR 2, ,906 2,587 Industrials TR 3, ,375 3,085 Consumer Disc. TR 3, ,789 2,673 Consumer Staples TR 5, ,995 5,524 Health Care TR Financials TR 4, ,397 3,954 Information Technology TR Telecom Services TR 2, ,781 2,591 Utilities TR 4, ,230 3,958 S&P/TSX 60 TR Index 2, ,324 2,165 MSCI Canadian Small Cap PR Index Return (CAD, % ) Annualized Return (CAD, % ) WORLD EQUITY INDEXES (local) Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low CAC 40 PR Index 5, ,442 4,311 DAX 30 PR Index 12, ,952 10,175 DJIA PR Index 21, ,179 17,884 DJIA TR Index 47, ,374 37,469 FTSE 100 PR Index 7, ,599 6,654 FTSE 100 TR Index 6, ,320 5,384 FTSE/Xinhua A200 9, ,035 8,090 Hang Seng PR Index 27, ,128 21,489 Hang Seng TR Index 75, ,144 56,043 MSCI EAFE TR Index 7, ,687 6,199 MSCI Emerging Markets TR 2, ,363 1,774 MSCI Europe TR Index 9, ,643 7,486 MSCI Far East Free (ex-japan) TR 1, ,366 1,016 MSCI World TR Index 7, ,868 6,499 MSCI World AC TR Index NASDAQ Composite PR 6, ,461 5,034 Nikkei 225 PR 19, ,318 16,112 Russell 2000 TR 6, ,739 5,600 Russell 2000 Growth TR 6, ,620 4,765 Russell 2000 Value TR 10, ,042 8,879 S&P 500 PR Index 2, ,491 2,084 S&P 500 TR Index 4, ,414 4,159 Shanghai Comp PR 3, ,391 2,969 ECO_RELEASE_DT Interest Rates Bank of Canada Overnight Lending Rate Bank of England Repo Rate European Central Bank Min bid rate at refi tender Federal Funds Target Rate Current 0.75% 0.25% 0.00% 1.25% Next Meeting 9/6/2017 9/14/2017 9/7/2017 9/20/2017 3

4 Total Ret (% ) Historical Prices Commodities ($US) Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low Copper Corn Crude Oil Gold 1, ,314 1,286 1, ,353 1,121 Natural Gas Nickel 11, ,865 18,678 15,909 29,600 12,202 8,700 Platinum 1, ,048 1,424 1,540 1,268 1, Soybeans ,090 1, , Silver Wheat Zinc 3, ,335 2,353 1,821 3,121 3,207 2,053 CPN MATURITY Bond Yields Coupon Maturity Date Canada 2 Year Treasuries /1/ Year Treasuries /1/ Year Treasuries /1/2048 ECB 2 Year Treasuries /13/ Year Treasuries /15/ Year Treasuries /15/2046 Japan 2 Year Treasuries /15/ Year Treasuries /20/ Year Treasuries /20/2047 US 2 Year Treasuries /31/ Year Treasuries /15/ Year Treasuries /15/2047 Current Price Yield to Maturity Total Ret (% ) Historical Prices Currencies Close Week YTD 1 YR 3YR 5 YR 10 YR 52 wk high 52 wk low CAD / EURO CAD / USD CAD / UK POUND USD / AUSTRALIAN $ USD / BRAZIL REAL USD / EURO USD / MEXICAN PESO USD / UK POUND USD / YEN Source: Bloomberg, as of September 1,

5 Commentaries contained herein are provided as a general source of information based on information available as of September 1, 2017 and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and the manager accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Published Date: September 5,