Week ending: April 5, 2013 MAJOR NEWS: Most global markets declined for the week, due to weak PMI reports and disappointing U.S. employment data. Looking ahead: Eurozone industrial production and U.S. retail sales numbers to be released. Global Markets EQUITY INDICES Close % chg Week % chg YTD EQUITY INDICES Close % chg Week % chg YTD CAN: S&P/TSX 12332-3.3% -0.8% Sw itzerland: SMI 7641-2.2% 12.0% US: INDU 14565-0.1% 11.1% Japan: NKY 12834 3.5% 23.5% US: SPX 1553-1.0% 8.9% Hong Kong: HSI 21727-2.6% -4.1% Nasdaq: CCMP 3204-1.9% 6.1% Thailand: SET 1490-4.6% 7.0% Brazil: IBOV 55051-2.3% -9.7% Malaysia: KLCI 1689 1.0% Mexico: MEXBOL 43244-1.9% -1.1% Singapore: STI 3300-0.3% 4.2% UK: FTSE 100 6250-2.5% 6.0% Taiw an: TWSE 7942 0.3% 3.2% Euro Stoxx 50: SX5E 2585-1.5% -1.9% Korea: KOSPI 1927-3.9% -3.5% Germany: DAX 7659-1.8% 0.6% Manila: PCOMP 6727-1.8% 15.7% France: CAC 3663-1.8% 0.6% Australia: AS30 4899-1.6% 5.0% Netherlands: AEX 525-2.3% -0.7% China: Shanghai 2225-0.5% -1.9% Italy: FTSE MIB 15250-0.6% -6.3% India: Sensex 18450-2.0% -5.0% COMMODITIES Close % chg Week % chg YTD CURRENCIES Close % chg Week % chg YTD Gold US$/oz. 1581.2-1.1% -5.6% U.S./CAD 0.98-2.5% Oil US$/bbl. 92.7-4.7% 1.0% CAD/Euro 1.33 1.8% 1.2% U.S./BP 1.53 0.9% -5.6% BOND YIELDS Close chg Week chg YTD JY/U.S. 97.54 3.5% 12.4% 10 yr Canada Govt. 1.75% -0.01-0.07 Euro/BP 1.18-0.3% -4.4% 10 yr U.S. Treas 1.69% -0.16-0.06 U.S./Euro 1.30 1.4% -1.2% 10 yr Germany Govt. 1.22% -0.06-0.08 JY/BP 149.17 4.5% 6.1% 10 yr Japan Govt. 0.53% -0.02-0.25 30 yr Canada Govt. 2.36% -0.15-0.01 30 yr U.S. Treas 2.86% -0.24-0.08 Source: Datastream. Index returns are in local currency. All returns are price returns and do not include dividends. PAGE 1
CANADA 3.0% S&P/TSX Comp. Index -0.43% -0.10% -0.48% -0.25% -3.0% -2.05% The S&P/TSX Composite Index was down 3.3% for the week, after a rising trade deficit and an increase in the unemployment rate weighed on investor sentiment. All ten GICS sectors ended posting negative returns, with the materials sector detracting the most, followed by the industrials sector. In the materials sector, Barrick Gold Corp. was down on speculation that its Chilean subsidiary, Minera Nevada SpA, could lose the Pascua deposit, worth millions, after a series of frauds regarding mining property and repeated poor environmental practices. In the industrials sector, railway stocks declined after data from the U.S. indicated weakening growth in the manufacturing sector. Canada s trade deficit widened in February to $1.0 billion, from a deficit of $746 million in January, due to a decline in exports of metals. The Ivey Purchasing Managers Index, a measure of purchasing activity in Canada, rose in March to 61.6, from 51.1 in February, driven by increase in inventory levels. Canada s unemployment rate rose in March to 7.2%, from 7.0% in February, led by job losses in accommodation and food services, public administration and manufacturing industries. PAGE 2
U.S. Dow Jones Index 2.0% -0.04% 0.61% 0.38% -0.76% -0.28% -2.0% U.S. equities were down for the week, due to disappointing employment numbers and ISM manufacturing and non-manufacturing reports. The Dow Jones Index lost 0.1%, the Nasdaq lost 1.9%, and the S&P 500 Index was down by 1.0% for the week. The ISM manufacturing index fell in March to 51.3, from 54.2 in February, owing to weakness in new orders and production. The ISM non-manufacturing index also fell in March, to 54.4, from 56.0 in February, marking the slowest pace of growth since July 2012. The employment index and new orders declined, while backlog orders remained unchanged. The U.S. trade deficit shrank in February to US$43.0 billion, from a deficit of US$44.4 billion in January, primarily driven by a decline in oil imports and a gain in exports. Mortgage applications in the U.S. fell for the week ended March 29 by 4.0%, following a 7.7% gain in the prior week, primarily due to fewer applications for refinancing. In contrast, applications for house purchases rose. Supported by a surge in demand for aircraft, U.S. factory orders rose in February by 3.0% month-on-month, following a decline of 1.0% in January. Initial jobless claims rose for the week ended March 30 by 28,000, to 385,000, indicating that the federal government spending cuts that went into effect on March 1, known as the sequester, may be starting to weigh on the economy. U.S. non-farm payroll employment rose in March by 88,000, and the unemployment rate fell to 7.6%, from 7.7% in February. Employment grew in professional and business services and in health care, but declined in retail trade. U.S. construction spending rose in February by 6.9% year-on-year, following a gain of 6.4% in January, supported by the highest level of home building in more than four years. PAGE 3
CONTINENTAL EUROPE 3.0% 2.13% DJ Euro Stoxx 50-3.0% 0.00% -0.67% -1.52% -1.38% European markets dropped last week, after European Central Bank (ECB) governor Mario Draghi stated that expectations of economic recovery in the region during the second half of the year could be subject to downward revisions. The DJ Euro Stoxx 50 Index fell by 1.5% for the week, while Germany s DAX Index and France s CAC Index both lost 1.8%. The ECB left its key interest rate unchanged, at 0.75%, even though low inflation in the eurozone and a higher unemployment rate continued to put pressure on the Bank to cut its interest rate. The eurozone s inflation fell in March to an annualized rate of 1.7%, from 1.8% in February; increases in the cost of services were offset by easing energy costs. The unemployment rate in the eurozone rose in February to 12.0%, from 11.9% in January. Sectors such as banks, car manufacturing and airlines shed jobs in order to cut costs. The eurozone s composite PMI for manufacturing and services fell in March to 46.5, from 47.9 in February, indicating that the economic downturn is deepening in the 17-nation bloc. (A reading below 50 indicates contraction.) Eurozone retail sales fell in February by 0.3% month-on-month, after rising by 0.9% in January. Gains in Germany and Spain were offset by a larger decline in France during the period. German factory orders rose in February by 2.3% month-on-month, after falling by 1.6% in January, providing evidence of an improving business environment and strength in German domestic demand for various manufactured products. The number of Spanish people registering for jobless benefits fell in March by 4,979, to 5.0 million, from February, adding to signs that the eurozone s fourth-largest economy might stabilize during 2013. PAGE 4
U.K. 2.0% 1.23% FTSE 100 Index 0.00% -2.0% -1.08% -1.19% -1.49% The U.K. s stock market, as measured by the FTSE 100 Index, lost 2.5% for the week, owing to lower-thanexpected U.S. job data. One of the largest declines was registered in the airlines sector, where stocks fell on concerns that demand for travel could be affected by an outbreak of bird flu in China. House prices in the U.K., as measured by Halifax, increased in March by 0.2% month-on-month to 163,943 pounds sterling. House prices were pushed up by growth in demand, stemming from the introduction of government measures to support lending. The U.K. s manufacturing PMI rose in March to 48.3, from 47.9 in February, but remained below 50.0, indicating that consumer demand for manufactured products remained subdued, while prices increased and job cuts continued. A reading below 50 indicates contraction. The U.K. s services PMI rose in March to 52.4, from 51.8 in February, easing concern that the economy may be heading for a triple-dip recession. The U.K. s mortgage approvals fell in February to 51,653, compared with a revised 54,719 in January, indicating that the recovery in housing market may continue to be slow. The Markit and Chartered Institute of Purchasing and Supply s index of U.K. construction activity in March stood at 47.2, up from 46.8 in February, but still below the 50.0 mark that separates growth and contraction. Poor demand coupled with cold weather resulted in a third consecutive month of contraction in the U.K. construction sector. The Bank of England left its key interest rate unchanged, at 0.5%, and maintained its asset purchase plan at 375 billion pounds sterling. The U.K. s new car registrations grew in March to 394,804, from 372,835 a year earlier, pulled up by brands such as Vauxhall, Audi and Honda. PAGE 5
JAPAN 4.0% Nikkei 225 2.99% 2.20% 1.58% -4.0% -2.12% -1.08% Japanese stocks, as measured by the Nikkei, gained for the week, bolstered by a weaker yen, after the Bank of Japan announced aggressive qualitative and quantitative easing measures. The index was down on Monday and Tuesday in advance of the Bank of Japan meeting, but managed to gain 3.5% for the week. Japan posted a current account surplus of 637.4 billion yen in February, compared with a deficit of 364.8 billion yen in January; a sharply weaker yen helped boost the value of income from investments overseas, and the Lunar New Year chipped away at the trade deficit by pulling down the volume of imports. Business confidence among large Japanese manufacturers, as measured by the Bank of Japan s Tankan survey, climbed in March by four points, to -8, from December. The first increase in three quarters was helped by the yen s decline. Japan s leading economic index increased in February to 97.5, from 95.0 in January. At the same time, the coincident economic index, which measures the current economic situation, rose to 92.1, from 91.6 in January, indicating that the economy may gain momentum. Japanese auto sales declined in March by 15.6% year-on-year, following a decrease of 12.2% in the previous month. Japanese vehicle sales continued to decline after government subsidies on fuel-efficient cars expired in September. PAGE 6
SOUTHEAST ASIA 3.0% Hang Seng 0.00% 0.31% -0.14% 0.00% -3.0% -2.73% Most Asian equities declined last week amid a mix of political and economic news. On the political side, North Korea s escalating threats against its neighbours sapped risk appetite, while mixed U.S. economic data during the week raised concerns about the strength of the recovery. China s Shanghai composite declined 0.5%, while Hong Kong s Hang Seng declined 2.6% and India s Sensex lost 2.0%. China s non-manufacturing PMI rose in March to 55.6, from 54.5 in February, adding to signs of a modest uptick in the world s second-largest economy. The move was driven by activity in the construction sector, whose sub-index jumped 4.5 points, to 62.5, in March. China s services PMI, published by HSBC, showed growth rebounding to a six-month high of 54.3 in March, from 52.1 in February, with improving economic conditions lifting demand. The HSBC India Manufacturing PMI stood at 52.0 in March, down from 54.2 in February, after new business orders declined and power outages hampered production activity. A reading above 50, however, still indicates expansion. The HSBC Hong Kong PMI fell to 50.5 in March, from 51.2 in February, due to weak output growth and higher input costs. The value of Hong Kong s retail sales rose in February by 22.7% year-on-year, following a gain of 10.5% in the previous month, after consumption and tourist arrivals rose during the Lunar New Year holidays. PAGE 7
LATIN AMERICA 3.0% Brazil IBOV 1.23% 0.74% -3.0% -0.80% -1.81% -1.65% Latin American stocks declined for the week, due to weakness in resource prices and disappointing U.S. employment data. Brazil s Ibovespa declined by 2.3%, while Mexico s MEXBOL fell by 1.9%. Mexico s leading indicator was unchanged in February, at 100.2, compared with January, indicating that the economy may continue to grow in the near term but is unlikely to accelerate. Mexico s manufacturing PMI declined in March to 51.3, from 51.8 in February. In contrast, the services PMI rose in March to 51.3, from 51.1 in February. (A reading above 50.0 indicates expansion.) Brazil s industrial production declined in February by 2.5% month-on-month, compared with an increase of 2.6% in January, led by a decline in manufacturing of food, beverages and textiles. Brazil s manufacturing PMI declined in March to 51.8, from 52.5 in February. The services PMI also declined in March to 50.3, from 52.1 in February, indicating that economic growth is likely to remain sluggish. (A reading above 50.0 indicates expansion.) Unless otherwise stated, the source of all data is Datastream. 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. PAGE 8