Week ending: March 15, 2013 MAJOR NEWS: Markets were mixed during the week after positive U.S. employment data was offset by expectations of policy tightening in China. Looking ahead: The U.S. FOMC meets on March 19 th. Global Markets EQUITY INDICES Close % chg Week % chg YTD EQUITY INDICES Close % chg Week % chg YTD CAN: S&P/TSX 12830 3.2% Sw itzerland: SMI 7864 1.5% 15.3% US: INDU 14514 0.8% 10.8% Japan: NKY 12561 2.3% 20.8% US: SPX 1561 0.6% 9.4% Hong Kong: HSI 22533-2.4% -0.5% Nasdaq: CCMP 3249 0.1% 7.6% Thailand: SET 1598 2.0% 14.8% Brazil: IBOV 56869-2.7% -6.7% Malaysia: KLCI 1628-1.6% -3.6% Mexico: MEXBOL 42605-3.9% -2.5% Singapore: STI 3286-0.1% 3.8% UK: FTSE 100 6490 0.1% 1 Taiw an: TWSE 7927-1.1% 3.0% Euro Stoxx 50: SX5E 2726-0.1% 3.4% Korea: KOSPI 1987-1.0% -0.5% Germany: DAX 8043 0.7% 5.7% Manila: PCOMP 6655-2.6% 14.5% France: CAC 3844 0.1% 5.6% Australia: AS30 5129-0.2% 1 Netherlands: AEX 546 0.3% 3.1% China: Shanghai 2278-1.7% 0.4% Italy: FTSE MIB 16061-0.9% -1.3% India: Sensex 19428-1.3% COMMODITIES Close % chg Week % chg YTD CURRENCIES Close % chg Week % chg YTD Gold US$/oz. 1592.0 0.8% -5.0% U.S./CAD 0.98 0.9% -2.7% Oil US$/bbl. 93.5 1.6% 1.8% CAD/Euro 1.33-0.1% 1.4% U.S./BP 1.51 1.3% -7.0% BOND YIELDS Close chg Week chg YTD JY/U.S. 95.28-0.8% 9.8% 10 yr Canada Govt. 1.90% -0.04 0.08 Euro/BP 1.16 0.7% -6.1% 10 yr U.S. Treas 2.00% -0.06 0.25 U.S./Euro 1.31 0.7% -0.9% 10 yr Germany Govt. 1.46% -0.05 0.16 JY/BP 143.90 0.2% 2.4% 10 yr Japan Govt. 0.60% -0.04-0.19 30 yr Canada Govt. 2.60% -0.02 0.23 30 yr U.S. Treas 3.23% -0.03 0.28 Source: Datastream. Index returns are in local currency. All returns are price returns and do not include dividends. PAGE 1
CANADA 2.0% S&P/TSX Comp. Index 0.18% 0.16% 0.44% 0.24% -2.0% -1.04% The S&P/TSX Composite Index was largely unchanged for the week, after gains in the information technology, energy and consumer discretionary sectors were offset by declines in other sectors. Three of the ten GICS sectors gained for the week, led by the information technology sector; the health-care sector declined the most. BlackBerry pushed the information technology sector higher after the CEO of PC maker Lenovo Group Ltd. announced that there could be a possibility of a deal between the two companies. Catamaran Corp. pulled the health-care sector lower, after the company lowered revenue guidance for 2013. Existing home sales in Canada declined in February by 2.1% month-on-month, to 34,954 units, mainly due to weaker home sales in Vancouver and Toronto. Canada s New Housing Price Index rose in January by 0.1% month-on-month, following a gain of 0.2% in December, led by increase in house prices in metropolitan regions of Toronto and Oshawa, and Calgary. Capacity utilization of Canadian industries declined in the fourth quarter of 2012 to 80.7%, from 81.1% in the third quarter, led by decline in the transportation equipment and food industries. PAGE 2
U.S. Dow Jones Index 2.0% 0.35% 0.02% 0.04% 0.58% -0.17% -2.0% U.S. equities rose for the week, owing to positive economic data. The Dow Jones Index gained 0.8%, the NASDAQ gained 0.1% and the S&P 500 Index rose by 0.6% for the week. U.S. industrial production rose in February by 0.7% month-on-month, following no change in January, led by a jump in output of business equipment and motor vehicles. U.S. consumer prices rose in February by 0.7% month-on-month, driven by higher gasoline prices. Consumer prices were unchanged in January. U.S. current account deficit declined in the fourth quarter to US$110.4 billion, from a deficit of US$112.4 billion in the third quarter, mainly owing to an improvement in earnings on foreign investments. Initial jobless claims decreased for the week ended March 9 by 10,000, to 332,000, after employers retained staff owing to improving economic environment. Retail sales in the U.S. (excluding autos) rose in February by 1.0% month-on-month, following a revised gain of 0.4% in January, owing to a jump in sales of building materials and general merchandise. The National Federation of Independent Business optimism index, a measure of confidence among small businesses, rose in February to 90.8, from 88.9 in January, indicating prospects for small businesses are improving. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined in March to 71.8, from 77.6 in February, which may signal a slowdown in consumer spending. PAGE 3
CONTINENTAL EUROPE 3.0% DJ Euro Stoxx 50 1.48% -0.37% -0.25% -0.26% -0.69% -3.0% Performance of the European markets was mixed for the week as eurozone finance ministers prepared for a bailout for Cyprus. The DJ Euro Stoxx 50 Index declined 0.1%, while Germany s DAX Index and France s CAC Index rose by 0.7% and 0.1%, respectively. The harmonized consumer prices for the eurozone increased at a slower pace in February, gaining 1.8% year-on-year, after rising by 2.0% in January. Consumer prices were lower in most of the countries, with exceptions like Luxembourg, where prices increased substantially. Employment in the eurozone declined for the fourth quarter of 2012 by 0.8% year-on-year, after declining by 0.6% in the third quarter, pulled down by greater job losses in countries like Spain, Italy and Bulgaria. Industrial output in the eurozone dropped in January by 0.4% month-on-month, after rising by 0.9% in December, indicating that the easing sovereign debt crisis is yet to sink through to lift economic activity in most eurozone countries. Germany s trade surplus improved in January to 13.7 billion euros, from 12.1 billion euros in December. The country is benefitting from global economic recovery and its strong competitive position overseas. Germany s industrial production stagnated in January as the European debt crisis weighed on company spending and investment. In December production rose by 0.6% month-on-month. Spain s industrial production fell in January by 5.0% from a year earlier, after declining a revised 7.1% in December, allaying concerns that the recession may be deepening. An index of industrial confidence for France rose in February to 96.0, from 95.0 in January, suggesting that increasing demand from abroad is supporting Europe s second-largest economy. PAGE 4
U.K. 2.0% FTSE 100 Index 0.31% 0.11% 0.74% -0.45% -0.61% -2.0% The U.K. stock market, as measured by the FTSE 100 Index, rose by 0.1% for the week, led by a spurt in market activity, which was later dampened by downbeat manufacturing and production figures. The U.K. s industrial production dropped in January by 1.2% month-on-month, after rising by 1.1% in December, as factory orders slumped. The U.K. s trade deficit narrowed in January to 8.2 billion pounds sterling, from a deficit of 8.7 billion pounds sterling in December, due to an unusual trade surplus in oil. Oil exports were up by around 0.3 billion pounds sterling and imports were down by more than 1.0 billion pounds sterling during the period. The National Institute of Economic & Social Research cut its GDP growth estimate for the U.K. for the three months ending February to -0.1%, after predicting a growth rate of -0.2% for the three months ending January. Economic activity in the U.K. has shrunk, indicating that the country has once again dipped into a technical recession. House prices in the U.K., as measured by Rightmove, rose in March by 1.7% month-on-month, after increasing by 2.8% in February. House prices are expected to increase throughout 2013, led by higher property demand. PAGE 5
JAPAN 3.0% 0.53% Nikkei 225 1.16% 1.45% -0.28% -0.61% -3.0% Japanese stocks, as measured by the Nikkei, gained 2.3% for the week. Investor sentiment was boosted on renewed expectations of a more aggressive monetary policy after the Bank of Japan governor elect Haruhiko Kuroda and his deputies take over office on March 20 th. Japan s machine tool orders fell in February by 21.5% year-on-year, after declining by 26.4% in January, largely due to weak demand for precision and industrial machinery. Japan s corporate goods price index rose in February by 0.4% month-on-month, following a gain of 0.2% in January, largely due to higher prices of agricultural products. However, on a year-on-year basis, prices declined by 0.1%, marking the 11 th consecutive month of decline. Japan's tertiary industry index, which measures spending in the services sector, declined in January by 1.1% month-on-month, led by wholesale and retail trade industries. In December, the index rose by 1.1%. Japan s industrial production growth for January was revised down to 0.3% month-on-month, compared with the initial estimate of 1.0% gain. The downward revision was largely due to inclusion of data on medical goods which was excluded from the initial estimate. Japan s consumer confidence index rose in February to 44.3, from 43.3 in January, largely supported by improvement in employment conditions. PAGE 6
SOUTHEAST ASIA 2.0% Hang Seng 0.00% 0.28% -0.38% -2.0% -0.87% -1.46% Most Asian markets were down for the week. China s Shanghai Composite fell 1.7% and Hong Kong s Hang Seng lost 2.4%, after increase in inflation in China raised expectations of further policy tightening by the Chinese government. India s Sensex was down 1.3%, as investors took profits ahead of the central bank's mid-quarter monetary policy review. New home prices in 66 out of 70 Chinese cities rose in February on a month-on-month basis, while prices in three cities were unchanged, indicating that the property market in China may be heating up once again. Hong Kong s industrial production rose in the fourth quarter of 2012 by 1.3% year-on-year, after declining for four consecutive quarters, supported by gains in the food, beverages and tobacco industry, and metal, computer, electronic and optical products, and the machinery and equipment industry. India s industrial output rose in January by 2.4% year-on-year, after declining by 0.5% in December, as manufacturing activity picked up following an increase in power production. India s trade deficit narrowed in February to US$14.9 billion, from a deficit of US$20.0 billion in January, as exports rose while imports declined. India s motor vehicle sales fell in February by 5.4% year-on-year, driven by 16.7% and 11.1% drop in sale of passenger and commercial vehicles, respectively, after high financing costs and high fuel prices weighed on demand. Motor vehicle production also declined in February by 3.3% year-on-year. India's wholesale price inflation rose in February to 6.8%, from a three-year low of 6.6% in January, limiting scope for the central bank to cut interest rates. South Korea s unemployment rate rose in February to 3.5%, from 3.2% in January, largely due to job losses in wholesale, retail, restaurants and hotel industries. South Korea s producer prices rose in February by 0.7% month-on-month, following a gain of 0.2% in January. The gain was primarily driven by higher oil prices and a rise in natural gas usage by households and industries. PAGE 7
LATIN AMERICA 5.0% Brazil IBOV 0.19% -0.57% -1.41% -0.18% -0.72% -5.0% Latin American equities were down for the week, due to concerns that policy tightening in China will affect demand for commodity exports from the Latin American economies. Mexico s MEXBOL and Brazil s Ibovespa lost 3.9% and 2.7%, respectively for the week. The Brazilian central bank s economic activity index rose in January to 144.6, from 142.8 in December. The index, a gauge of activity in the farming, manufacturing and services sectors, rose after the Brazilian government announced measures to fuel investment and also promised to cut taxes. Consumer prices in Brazil increased in March by 0.5% month-on-month, after rising by 0.2% in February, mainly led by higher cost of healthcare and transportation. Retail sales in Brazil went up in January by 0.6% month-on-month, after declining by 0.4% in December, led by an increase in sales of food, beverage and tobacco and health-care and pharmaceuticals products. Mexico s trade balance shifted to a deficit in January of US$2.9 billion, from a surplus of US$962 million in December, after exports declined from the previous month, whereas imports increased. Mexico s industrial production increased in January by 1.7% month-on-month, after declining by 1.1% in December, pulled down by the construction and manufacturing sectors. Retail sales in Mexico rose in February by 5.0% year-on-year, after increasing by 5.3% in January, led by higher clothing sales. The Central Bank of Chile kept its key interest rate unchanged at 5.0%, in order to keep a check on inflation. 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