Week in review. Week ending: April 27, 2018

Transcription

1 Week ending: April 27, 2018 MAJOR NEWS: Global equity markets were mixed for the week, amid concerns about higher borrowing rates for companies, with U.S. Treasury yields hitting the 3% mark for the first time in four years. Looking ahead: U.S. and U.K. manufacturing PMIs for April. Global Markets EQUITY INDICES Close % chg Week % chg MTD %chg YTD REGIONAL INDICES Close % chg Week % chg MTD %chg YTD CAN: S&P/TSX % 2.0% -3.3% MSCI All Country World Index % 1.1% -0.3% US: INDU % 0.9% -1.7% MSCI Europe % 3.8% -1.2% US: SPX % 1.1% -0.1% Euro Stoxx 50: SX5E % 4.7% 0.4% Nasdaq: CCMP % 0.8% 3.1% MSCI Emerging Markets Index % -1.2% -0.2% Brazil: IBOV % 1.3% 13.1% MSCI Asia-Pac ex Japan % -0.1% -1.1% Mexico: MEXBOL % 4.7% -2.2% MSCI EAFE % 1.9% -0.4% UK: FTSE % 6.3% -2.4% CURRENCIES Close % chg Week % chg MTD %chg YTD Germany: DAX % 4.0% -2.6% U.S./CAD % 0.5% -1.9% France: CAC % 6.1% 3.2% CAD/Euro % -1.8% 3.5% Netherlands: AEX % 4.3% 0.7% U.S./BP % -1.7% 2.0% Italy: FTSE MIB % 6.8% 9.5% JY/U.S % 2.6% -3.2% Sw itzerland: SMI % 1.2% -5.7% Euro/BP % 0.0% 1.2% Japan: NKY % 4.7% -1.3% U.S./Euro % -1.6% 0.8% Hong Kong: HSI % 0.6% 1.2% JY/BP % 0.9% -1.2% Thailand: SET % 0.1% 1.4% BOND YIELDS Close bps chg Week bps chg MTD bps chg YTD Malaysia: KLCI % 0.0% 3.7% 10 yr Canada Govt. 2.34% Singapore: STI % 4.4% 5.1% 10 yr U.S. Treas 2.99% Taiw an: TWSE % -3.2% -0.8% 10 yr Germany Govt. 0.56% Korea: KOSPI % 1.9% 1.0% 10 yr Japan Govt. 0.06% Manila: PCOMP % -3.2% -9.8% 30 yr Canada Govt. 2.41% Australia: AS % 3.0% -2.0% 30 yr U.S. Treas 3.18% China: Shanghai % -2.7% -6.8% COMMODITIES Close % chg Week % chg MTD %chg YTD India: Sensex % 6.1% 2.7% Gold US$/oz % 0.4% 1.6% Oil US$/bbl % 10.5% 12.7% * Please refer to Appendix for the above table in Canadian dollar terms. Source: Datastream. Gold and oil closing prices are from Bloomberg. Index returns are in local currency. All returns are price returns and do not include dividends. PAGE 1

2 CANADA S&P/TSX Comp. Index 0.44% 0.21% 0.82% 0.20% -0.48% - The S&P/TSX Composite Index rose 1.2% during the week, amid a broad-based rally due to strong earnings growth, especially in the U.S., that started to outweigh recent political concerns. Seven of the eleven GICS sectors rose for the week, led by the consumer staples sector, which was pushed higher by Alimentation Couche-Tard. In contrast, the health care sector declined during the week, weighed by a decline in the share price of Aurora Cannabis. Canadian wholesale trade declined in February by 0.8% month-on-month, compared with an upwardly revised 0.3% increase in the previous period; declines in the motor vehicle and parts and miscellaneous sectors offset increases in personal and household goods. PAGE 2

3 U.S. Dow Jones Index 0.25% 0.99% -0.06% -0.05% % U.S. equities were mostly negative for the week, after ten-year Treasury yields hit the highly anticipated 3% mark for the first time in four years, stoking concerns about higher borrowing rates for companies already facing rising costs; at the same time, quarterly results failed to deliver a positive outlook. The Dow Jones Index and the Nasdaq fell by 0.6% and 0.4%, respectively, while the S&P 500 Index remained unchanged. U.S. initial jobless claims decreased in the week ended April 21 to 209,000, from 233,000 in the previous week. The reading continues to hold below the 300,000 mark, indicating stable job markets. Mortgage applications in the U.S., as measured by the Mortgage Bankers Association, decreased in the week ended April 20 by 0.2%, following a 4.9% rise in the previous week. The decline was due to a decrease in refinancing activities, while applications to purchase homes remained unchanged. New orders for manufactured durable goods in the U.S. increased in March by 2.6% month-on-month, following an increase of 3.5% in the previous month, mainly driven by higher demand for transportation equipment. According to advance estimates, U.S. GDP expanded in the first quarter of 2018 at an annualized rate of 2.3%, down from the 2.9% reported in the previous period. It is the lowest growth rate in a year, due to weak personal consumption, led by lower spending on cars, clothing and footwear, while residential investment stalled. PAGE 3

4 CONTINENTAL EUROPE DJ Euro Stoxx % 0.58% 0.36% -0.06% -0.71% - European markets were positive for the week, primarily due to solid earnings reports. Gains were also driven by weakness in euro after the head of the European Central Bank (ECB) hailed solid economic growth but kept interest rates unchanged. Euro weakness would bolster earnings and revenue of European exporters. The DJ Euro Stoxx 50 Index increased by 0.7%, while France s CAC and Germany s DAX Index rose by 1.3% and 0.3%, respectively. The ECB held its benchmark refinancing rate at 0% at its April 26 meeting, as expected, and reaffirmed that the net asset purchases are intended to run at a monthly pace of 30 billion euros until the end of September, or beyond, if necessary. The deposit facility rate and the marginal lending facility rate were also left unchanged, at -0.4% and 0.25%, respectively. According to preliminary estimates, the Markit Eurozone composite PMI stood at 55.2 in April, unchanged from the previous month s 14-month low. Across sectors, the services PMI rose to 55, from 54.9 recorded in March, while the manufacturing PMI fell to 56, from 56.6 recorded earlier. (A reading above 50.0 indicates expansion, while a reading below 50.0 indicates contraction.) France s GDP increased in the first quarter of 2018 by 0.3%, down from a 0.7% growth reported in the previous quarter. It was the slowest pace of expansion since the third quarter of 2016, due primarily to weak domestic demand, with net foreign demand and changes in inventories making no contribution. PAGE 4

5 U.K. 0.42% 0.36% FTSE 100 Index 0.57% 1.09% -0.62% - The U.K. s stock market, as measured by the FTSE 100 Index, rose by 1.8% for the week, after weaker-thanexpected GDP data triggered a slide in sterling that boosted the competitiveness of the country s exporters. U.K. GDP increased in the first quarter of 2018 by 0.1% quarter-on-quarter, down from a 0.4% expansion recorded in the previous quarter. The slowest growth rate since a 0.1% contraction recorded in the fourth quarter of 2012, it was driven by a sharp fall in construction output and a sluggish manufacturing sector. House prices in the U.K., as measured by mortgage lender Nationwide, rose in April by 0.2% month-onmonth, following a decline of 0.2% in March. Although house prices rose a bit more quickly this month after touching a seven-month low in March, they are still expected to slow this year, reflecting weak economic growth and possibly higher interest rates, according to Nationwide. PAGE 5

6 JAPAN 0.86% Nikkei % 0.66% -0.33% -0.28% - Japanese equities, as represented by the Nikkei 225 Index, rose 1.4% during the week, with financials leading gains after U.S. bond yields spiked to four-year highs and as investors remained optimistic about upcoming earnings. The Bank of Japan left its key short-term interest rate unchanged, at -0.1%, at its April 2018 meeting, as expected. Policy-makers also kept the target for ten-year government bond yields around 0%, but dropped the target date for reaching 2% inflation. The unemployment rate in Japan stood at 2.5% in March, the same as in the previous month, although the availability of jobs increased, with a rise in the jobs-to-applicants ratio to 1.59 from 1.58 in the previous month, indicating continued strength in the domestic labour market. Retail sales in Japan rose in March by 1.0% year-on-year, down from an increase of 1.7% reported in the previous month. Sales increased at a slower pace for food and beverages, fuel, and machinery and equipment. PAGE 6

7 SOUTHEAST ASIA 1.26% Hang Seng 0.91% % -1.01% -1.06% Asian markets were mostly positive for the week, amid a rebound in technology companies due to strong earnings reports and a drop in U.S. Treasury yields that helped improve investors risk appetite. China s Shanghai composite index and India s Sensex gained 0.3%, 1.6% respectively, while Hang Seng lost 0.5%. Hong Kong s consumer prices rose in March by 2.6% year-on-year, down from a 3.1% increase in the previous month, mainly due to a slower growth of costs for electricity, gas and water, food and transport. Exports from Hong Kong rose in March 2018 by 8% year-on-year, to billion Hong Kong dollars, following a 1.7% gain in February, boosted by growth in the shipment of electrical machinery, office machines and power-generating machinery. South Korea s GDP advanced in the first quarter of 2018 by 2.8% year-on-year, matching the growth recorded for the previous quarter, but slightly below market expectations of 2.9%. A slowdown in utilities and construction offset growth in manufacturing and services. PAGE 7

8 LATIN AMERICA Brazil IBOV 1.57% 0.06% 0.07% -0.16% -0.50% - Latin American stock markets were mixed for the week, amid concerns about higher borrowing rates for companies, after U.S. Treasury yields hit the 3% mark for the first time in four years. Mexico s MEXBOL dropped 0.3%, while Brazil s Ibovespa gained 1.0%. Brazil posted a US$0.8 billion surplus in March, compared with a US$1.4 billion surplus in the same month of the previous year. The goods surplus decreased to US$6.0 billion from US$6.9 billion, and the services deficit rose to US$2.8 billion from US$2.5 billion. Mexico s unemployment rate went down in March to 2.9%, compared with 3.2% in the same month of the previous year and below market expectations of 3.1%. Among genders, the jobless rate edged down for men to 2.9% from 3.0%, and for women to 3.0% from 3.5%. Mexico recorded an all-time-high trade surplus of US$1.9 billion in March, compared with a US$63 million deficit a year ago, beating market consensus expectations of a US$228 million surplus, after exports grew much faster than imports. PAGE 8

9 Appendix Global Markets (all returns in Canadian dollar terms) EQUITY INDICES Close % chg Week % chg MTD %chg YTD REGIONAL INDICES Close % chg Week % chg MTD %chg YTD CAN: S&P/TSX % 2.0% -3.3% MSCI All Country World Index % 0.8% 2.3% US: INDU % 0.6% 1.0% MSCI Europe % 1.9% 2.2% US: SPX % 0.9% 2.5% Euro Stoxx 50: SX5E % 2.8% 3.9% Nasdaq: CCMP % 0.6% 5.9% MSCI Emerging Markets Index % -1.5% 2.5% Brazil: IBOV % -3.1% 11.1% MSCI Asia-Pac ex Japan % -0.4% 1.5% Mexico: MEXBOL % 2.0% 5.2% MSCI EAFE % 1.6% 2.3% UK: FTSE % 4.3% 2.2% CURRENCIES Close % chg Week % chg MTD %chg YTD Germany: DAX % 2.1% 0.8% U.S./CAD % 0.5% -1.9% France: CAC % 4.2% 6.8% CAD/Euro % -1.8% 3.5% Netherlands: AEX % 2.4% 4.1% U.S./BP % -1.7% 2.0% Italy: FTSE MIB % 4.8% 13.3% JY/U.S % 2.6% -3.2% Sw itzerland: SMI % -2.2% -4.6% Euro/BP % 0.0% 1.2% Japan: NKY % 1.9% 4.6% U.S./Euro % -1.6% 0.8% Hong Kong: HSI % 0.4% 3.5% JY/BP % 0.9% -1.2% Thailand: SET % -1.1% 7.4% BOND YIELDS Close bps chg Week bps chg MTD bps chg YTD Malaysia: KLCI % -1.5% 9.9% 10 yr Canada Govt. 2.34% Singapore: STI % 3.0% 8.8% 10 yr U.S. Treas 2.99% Taiw an: TWSE % -4.9% 2.3% 10 yr Germany Govt. 0.56% Korea: KOSPI 3 0.9% 0.6% 3.1% 10 yr Japan Govt. 0.06% Manila: PCOMP % -3.1% -11.1% 30 yr Canada Govt. 2.41% Australia: AS % 1.4% -2.7% 30 yr U.S. Treas 3.18% China: Shanghai % -3.8% -1.8% COMMODITIES Close % chg Week % chg MTD %chg YTD India: Sensex % 3.4% 0.8% Gold US$/oz % -0.1% 3.6% Oil US$/bbl % 9.9% 14.9% Unless otherwise stated, the source of all data is Datastream. Gold and oil closing prices are from Bloomberg. All views expressed are those of Fidelity Investments. This document is not to be reproduced or circulated without prior permission. Issued by Fidelity Investments Canada ULC. Read a fund s prospectus and consult your investment professional before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Investors will pay management fees and expenses, may pay commissions or trailing commissions and may experience a gain or loss. Any mention of specific securities is for illustrative purposes only and not a recommendation to buy or sell, nor is it an indication of how the portfolio of any Fidelity Fund is invested. Fidelity Investments is a registered trademark of Fidelity Investments Canada. PAGE 9