October 2017 Oc tober 2017 Financial and Industrial sectors pace another positive month for Canadian equities The S&P/TSX Composite Index climbed 2.50% through the month of October on a price-only basis. Of the 250 stocks in the index at month end, 162 rose, 88 fell and 1 remained unchanged, including the one constituent removed during the month. The small and mid-cap indices underperformed the broader index, while the large-cap index outperformed. Sector performance was bookended by gains in financials and losses in energy during the month. 2017 Index Returns (Price Only) S&P/TSX Composite S&P/TSX 60 S&P/TSX Completion S&P/TSX Small Cap Top 10 Point Contributors 1) Royal Bank of Canada (+55.2) 2) Toronto-Dominion Bank (+49.7) 3) Bank of Nova Scotia (+33.8) 4) Canadian Natural Resources Ltd. (+25.4) 5) Bank of Montreal (+24.9) 6) Brookfield Asset Management Inc. (+16.5) 7) Canadian Pacific Railway Ltd. (+15.1) 8) Canadian Imperial Bank of Commerce (+13.9) 9) Alimentation Couche-Tard Inc. (+11.0) 10) Magna International Inc. (+9.6) October YTD 2.50% 4.83% 2.75% 5.24% 1.72% 3.66% 1.55% -2.19% Top 10 Point Detractors 1) Barrick Gold Corp. (-20.6) 1) Enbridge Inc. (-30.5) 2) Teck Resources Ltd. (-16.3) 2) Barrick Gold Corp. (-12.2) 3) Shopify Inc. (-10.5) 4) Eldorado Gold Corp. (-6.5) 5) Valeant Pharmaceuticals International Inc. (-6.3) 6) Cameco Corp. (-4.5) 7) ARC Resources Ltd. (-3.6) 8) Metro Inc. (-3.5) 9) Pembina Pipeline Corp. (-3.4) 10) Tourmaline Oil Corp. (-3.2) October 2017 Monthly S&P/TSX Composite Index Performance by Sector (Price only) 4.5% 4.0% 3.5% 3.0% 2.5% Financials 4.0% Industrials 3.4% Real Estate 3.2% Cons. Disc. 3.2% 3.1% Telecom 3.0% Info. Tech. 2.8% S&P/TSX 2.5% Cons. Staples 2.2% 2.0% 1.5% 1.6% 1.0% 0.5% 0.0% -0.5% -1.0% Source: Bloomberg Healthcare -0.3% Energy -0.4% 1 VERUS MONTHLY MARKET INSIGHTS
Sector Monthly price-only return Monthly total return Financials 34.90% of S&P/TSX Composite +4.03% +4.58% Energy 19.71% of S&P/TSX Composite 11.36% of S&P/TSX Composite Industrials 9.60% of S&P/TSX Composite Consumer Discretionary 5.47% of S&P/TSX Composite Telecommunications Services 4.79% of S&P/TSX Composite 3.85% of S&P/TSX Composite -0.43% -0.35% +1.57% +1.58% +3.42% +3.42% +3.19% +3.30% +2.95% +2.95% +3.11% +3.29% Notable Movement 24 of the Financials sector s 27 constituents rose through October while only 3 declined. Royal Bank of Canada (RY, +4.5%) was the largest point contributor in the sector through the month. Laurentian Bank of Canada (LB, -0.5%) was the largest point detractor. The Energy sector saw 30 of its 50 month-end constituents decline through the month, while 20 rose and 1 remained unchanged, including the 1 stock removed from the sub-index. Enbridge Inc. (ENB, -4.9%) was the largest point detractor in October while Canadian Natural Resources Ltd. (CNQ, +7.7%) outperformed on a points basis. Toward the end of the month, the price of WTI crude oil closed above US$54.00/bbl for the first time since February. Of the sector s 56 constituents, 29 rose while the remaining 27 fell. Wheaton Precious Metals Corp. (WPM, +12%) was the most significant point contributor in the sub-index, as 3G Capital spoke favourably of the stock at a mid-month investor conference. Barrick Gold Corp. (ABX, -7.2%) was the biggest laggard in the sector. 21 of the sector s 26 constituents gained through the month, while the other 5 posted declines. Canadian Pacific Railway Ltd. (CP, +6.7%) was the sector s largest point contributor. Ritchie Bros. Auctioneers Inc. (RBA, -8.3%) was the sub-index s biggest laggard after reporting disappointing September auction metrics. The Consumer Discretionary sector saw 16 of its 22 constituents gain through the month of October, while the remaining 6 fell. Magna International Inc. (MG, +5.7%) was the sector s largest point contributor for the month of October. Hudson s Bay Co. (HBC, -11%) was the sector s biggest point laggard as the stock slid in the days after the company announced a multifaceted plan to cut debt, including the sale of its Lord & Taylor Fifth Avenue store. All three of the sector s constituents finished October higher than they started. TELUS Corp. (T, +4.1%) outperformed its peers on an index points contribution basis. The sector saw 13 of its 16 constituents rise through the month and the other 3 fall. Fortis Inc. (FTS, +6.1%) contributed the most points to the sub-index s October rally. Innergex Renewable Energy Inc. (INE, -2.0%) was the sector s biggest point laggard after announcing the acquisition of Alterra Power Corp. 2 VERUS MONTHLY MARKET INSIGHTS
Consumer Staples 3.57% of S&P/TSX Composite Information Technology 3.28% of S&P/TSX Composite Real Estate 2.87% of S&P/TSX Composite Health Care 0.60% of S&P/TSX Composite +2.22% +2.31% +2.80% +2.80% +3.20% +3.54% -0.29% -0.19% 7 of the Consumer Staples sector s 11 constituents advanced through the month, while the remaining 4 declined. Metro Inc. (MRU, -5.4%), the largest point detractor in the sector, sold most of its stake in Alimentation Couche-Tard Inc. (ATD.B, +6.3%), the sector s largest point contributor, to help finance its acquisition of pharmacy chain Jean Coutu Group Inc. The Information Technology sector saw 9 of its 12 constituents rise, while the remaining 3 fell. Open Text Corp. (OTEX, +12%) was the sector s biggest point contributor through October. Shopify Inc. (SHOP, -12%) was the sector s biggest point laggard as short-seller Citron targeted the firm early in the month. The Real Estate sector saw 17 of its 21 constituents gain ground through the month, while 4 ended the month in the red. Colliers International Group Inc. (CIGI, +22%) shares rallied at the end of the month after posting stronger-than-expected Q3F17 earnings. SmartCentres REIT (SRU.un, -1.6%) removed the most points from the sub-index through October. Sector constituents were split, 3 gaining and 3 declining, by the end of October. Valeant Pharmaceuticals International Inc. (VRX, -16%) was the largest point detractor during the month. 3 VERUS MONTHLY MARKET INSIGHTS
October 2017 Tech sector propels S&P 500 to another winning month The S&P 500 Index rose 2.22% on a price-only basis through the month of October. Of the 505 stocks in the index at month end, 321 rose and 185 declined, including the one constituent removed from the index during the month. The Dow Jones Industrial Average and NASDAQ Composite indices outperformed the S&P 500 in October, while the Russell 2000 underperformed. The S&P 500 enjoyed a modest rally as 7 of 11 sectors ended the month higher. 2017 Index Returns (Price Only) S&P 500 Dow Jones Industrial Average NASDAQ Composite Russell 2000 Top 10 Point Contributors 1) Apple Inc. (+9.0) 2) Microsoft Inc. (+7.8) 3) Amazon.com Inc. (+6.7) 4) Intel Corp. (+4.1) 5) Johnson & Johnson (+2.9) 6) Facebook Inc. (+2.5) 7) Bank of America Corp. (+2.3) 8) JPMorgan Chase & Co. (+2.3) 9) Alphabet Inc. - Class A (+2.1) 10) Alphabet Inc. - Class C (+2.0) October YTD 2.22% 15.03% 4.34% 18.29% 3.57% 24.98% 0.80% 10.73% Top 10 Point Detractors 1) Celgene Corp. (-4.1) 2) General Electric Co. (-4.1) 3) AT&T Inc. (-3.6) 4) Merck & Co. Inc. (-2.9) 5) CVS Health Corp. (-1.5) 6) Comcast Corp. (-1.3) 7) Walgreens Boots Alliance Inc. (-1.2) 8) Procter & Gamble Co. (-1.2) 9) Philip Morris International Inc. (-1.2) 10) Allergan PLC (-1.1) October 2017 Monthly S&P 500 Index Performance by Sector (Price only) 10.0% 8.0% Info. Tech. 7.7% 6.0% 4.0% 2.0% 0.0% 3.9% 3.8% Financials 2.8% S&P 500 2.2% Cons. Disc. 2.0% Real Estate 0.7% Industrials 0.2% -2.0% -4.0% Energy -0.7% Healthcare -0.8% Cons. Staples -1.6% -6.0% -8.0% -10.0% Source: Bloomberg Telecom -8.7% 4 VERUS MONTHLY MARKET INSIGHTS
Sector Information Technology 24.47% of S&P 500 Index Financials 14.69% of S&P 500 Index Health Care 14.07% of S&P 500 Index Consumer Discretionary 11.87% of S&P 500 Index Industrials 10.02% of S&P 500 Index Consumer Staples 7.93% of S&P 500 Index Energy 5.92% of S&P 500 Index Monthly price-only return Monthly total return +7.67% +7.76% +2.81% +2.93% -0.84% -0.76% +2.02% +2.11% +0.15% +0.20% -1.59% -1.40% -0.72% -0.66% Notable Movement The sector saw 59 of its 69 constituents rise through October, while the remaining 10 fell. Apple Inc. (AAPL, +9.7%) added the most points to the sub-index (and the entire S&P 500) during October. Advanced Micro Devices Inc. (AMD, -14%) removed the most points despite better-than-expected Q3F17 financial results and raising its F17 revenue guidance. Of the sector s 67 constituents at month end, 52 climbed higher while the 15 others slipped lower. The largest point contributor in the sector by month end was Bank of America Corp. (BAC, +8.1%) following its best quarterly profit in six years. Intercontinental Exchange Inc. (ICE, -3.8%) was the largest point detractor through the month of October. Despite the sub-index s decline, 35 of the sector s 62 constituents rose in October while the other 27 fell. Celgene Corp. (CELG, -31%) was the sector s biggest point laggard as the company halted a final-stage trial of a Crohn s disease drug and, later in the month, reduced its long-term financial guidance. Contributing the most points to the sector through the month was Johnson & Johnson (JNJ, +7.2%). The sector saw 37 of its 84 month-end constituents rise through October, while 47 sold off. Amazon.com Inc. (AMZN, +15%) was the sector s best-performing constituent, after Q3F17 sales and profit topped analyst expectations. Comcast Corp. (CMCSA, -6.4%) weighed most significantly on the subindex, suffering along with other TV service providers after AT&T guided to Q3F17 U.S. video subscriber losses in mid-october. 41 of the 68 companies in the Industrials sub-index finished in the green through the month of October, while 27 finished lower. 3M Co. (MMM, +9.7%) led the sector in point contribution, rallying after beating Q3F17 earnings estimates and boosting its F17 EPS and sales growth guidance. The sector s worst performer was General Electric (GE, -17%) amid fear the company would cut its dividend after slashing its 2017 profit forecast. Of the Consumer Staples sector s 34 constituents, 18 ended the month lower than they started and 16 posted a monthly gain. CVS Health Corp. (CVS, -16%) was the sector s largest point laggard. Adding the most points to the sub-index in October was Wal-Mart Stores Inc. (WMT, +12%) after the stock reacted favourably to announcements made alongside the company s Oct. 10 th investor day. The Energy sector saw half of its 32 constituents rise through the month, while the other half ended the month in the red. Schlumberger (SLB, -8.3%) and Exxon Mobil Corp. (XOM, +1.7%) were the sector s biggest point detractor and contributor, respectively. 5 VERUS MONTHLY MARKET INSIGHTS
3.17% of S&P 500 Index 3.02% of S&P 500 Index Real Estate 2.94% of S&P 500 Index Telecommunication Services 1.91% of S&P 500 Index +3.86% +3.90% +3.80% +3.87% +0.68% +0.75% -8.69% -7.62% Of the sector s 28 constituents, 23 rose and the remaining 5 fell through the month. NextEra Energy Inc. (NEE, +5.8%) was the sector s biggest point contributor. PG&E Corp. (PCG, -15%) was the sector s biggest point laggard after speculation the company s downed power lines could have been a factor in the recent deadly wildfires in California. The sector saw 23 of its 25 constituents end the month in the green, while only 2 stocks finished the month lower than they began. DowDuPont Inc. (DWDP, +4.5%) added the most points to the sector after the market responded favourably to preliminary Q3F17 results. Newmont Mining Corp. (NEM, -3.6%) led the sector in point decline through the month of October. 17 of the 33 constituents in the Real Estate sub-index moved higher through October, with the remaining 16 trending lower. American Tower Corp. (AMT, +5.1%) was the sector s biggest point contributor. Simon Property Group Inc. (SPG, -3.5%), on the other hand, was the sub-index s biggest point laggard. Two of the sector s three month-end constituents declined through October while two rose, including the one constituent removed during the month. AT&T (T, -14%) led the sub-index s decline after pre-releasing select Q3F17 subscriber figures in mid-october. 6 VERUS MONTHLY MARKET INSIGHTS
Disclosures This report is provided to you for informational purposes only. The report is not intended to provide personal investment advice and does not take into account the specific investment objectives, financial situation or particular needs of any specific person. Investors should seek advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and management s analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized. Opinions, estimates and projections contained in this report are our own as of the date hereof and are subject to change without notice. The ScotiaMcLeod Global Portfolio Advisory Group prepared this report by aggregating information from various sources as a resource for ScotiaMcLeod Wealth Advisers and their clients. Information may be obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may also be obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third party sources: Standard & Poor s, Valueline, Morningstar, Bloomberg, and FactSet. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness. While the information provided in this report is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the ScotiaMcLeod Global Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Copyright 2017 Scotia Capital Inc. 7 VERUS MONTHLY MARKET INSIGHTS