Finally summer is underway and I’m sure we’re all happy to bask in the sunshine! Where the stock market is concerned, this time of year is often thought to be a period of little to no activity. Interestingly, this has not been the case for the last couple of years. If you take a look at the S&P/TSX Composite chart below, you’ll note the trend in each of the past two summer periods. While I can’t predict what the market will do for the remainder of 2019 (hence the reason I don’t try to “time” the market!), technical analysis is one of the many tools I use to ensure that we’re taking advantage of trends; be it oversold or overbought conditions.
South of the border, the picture looks much the same. This summer so far, the technology & consumer sectors are leading the way.
Regarding the currency front here in Canada, the trend is remarkably similar to the stock market movement over the past 3 June/July periods. Since the end of May 2019, we’ve seen the Canadian dollar gain strength against the USD – moving from $0.74 to current levels of $0.768. While this may not seem like much, it does have an impact on trade/exports and even in your own portfolio where you hold USD securities. If you’re planning on travelling to Europe and wondering about the Euro – run out and buy some – we’ve not seen Cdn buying power like this since Sept 2017.
On July 10th, the Bank of Canada kept the overnight lending rate the same at 1.75%. Here is an excerpt from their press release: “Evidence has been accumulating that ongoing trade tensions are having a material effect on the global economic outlook. The Bank had already incorporated such negative effects in previous Monetary Policy Reports (MPR) and in this forecast has made further adjustments in light of weaker sentiment and activity in major economies. Trade conflicts between the United States and China, in particular, are curbing manufacturing activity and business investment and pushing down commodity prices.” Bearish in tone to be sure, but given our well diversified portfolios, I’m comfortable with our current exposure to financials, etc.
If you have any questions about what I’ve written here or require assistance, please do not hesitate to contact us. Have a great summer ahead!
Source: Thomson One
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