Shiuman Ho's Weekly Update -- Monday January 10, 2022

Shiuman Ho's Weekly Update -- Monday January 10, 2022

一月 10, 2022 | Shiuman Ho

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Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

 

Markets

Market scorecard as of close on December 31, 2021, and performance for full year in 2021.

Equity Indices

Level

2021

S&P/TSX Composite

21,223

21.7%

S&P 500

4,767

26.9%

NASDAQ

15,645

21.4%

Euro Stoxx 50

4,298

21.0%

Hang Seng

23,398

-14.1%

Source: Bloomberg, RBC Wealth Management

 

Market scorecard as of close on Friday January 7, 2022.

Equity Indices

Level

1 week

YTD

S&P/TSX Composite

21,084

-0.7%

-0.7%

S&P 500

4,677

-1.9%

-1.9%

NASDAQ

14,936

-4.5%

-4.5%

Euro Stoxx 50

4,306

0.2%

0.2%

Hang Seng

23,493

0.4%

0.4%

Source: Bloomberg, RBC Wealth Management

  • U.S. equities opened the year with mixed results, as the growth-versus-value trade has begun to dominate headlines once again. Value is off to a relatively strong start, with the S&P 500 Value Index climbing 0.74% so far this week and the S&P 500 Growth Index falling 3.28%.

  • A spike in the 10-year Treasury yield has had a noticeable impact on equities to start the year. After closing out 2021 at 1.51%, the 10-year Treasury yield has risen by 21 basis points (bps) in January and is now at 1.72%, nearing its highest level since April 2021. With this, we have begun to see a rotation out of growth sectors such as Technology and Health Care and into sectors traditionally viewed as more value-oriented, including Energy and Financials.

  • A fresh round of selling hit Asian stocks on Thursday as the risk of accelerated Fed rate hikes sparked a broad equity decline.

 

Economy

Canada

  • It’s been a busy start to the year for the fixed income market, as rates are being driven higher by the market expectation that a milder omicron variant is unlikely to derail the Bank of Canada’s hiking plans for 2022, despite surging case counts and the renewal of pandemic restrictions.

  • Canada’s manufacturing sector ended 2021 on a strong note with output, new orders, employment, and inventories all increasing in December, according to IHS Markit’s Canada Manufacturing Purchasing Managers’ Index (PMI).

  • While demand for Canadian manufactured goods remained elevated in both domestic and international markets, supply disruptions and staffing shortages constrained output growth, weighing on the headline figure.

U.S. 

  • U.S. economic activity remains relatively strong, with this week’s 207,000 initial unemployment claims staying well below the five-year average of 241,000 prior to the pandemic. Other economic activity indicators are generally favorable as well, with the ISM Manufacturing and Services Purchasing Managers’ Indexes registering 58.7 and 62.0, respectively, indicating expansion in both the manufacturing and services sectors compared to last month.

Further Afield 

  • In the UK, inflation fears have intensified after a British Chambers of Commerce survey revealed that 58% of the near 5,500 participating companies are set to increase prices in the next three months.

  • The value of new homes sold by China’s largest real estate companies fell annually for the first time since at least 2016 and declined further in December.

 

Notes About Companies in Model Portfolio 

  • Johnson & Johnson (JNJ) announced new results from the largest study to date on the durability of COVID-19 vaccines in the U.S., showing that a single shot of the Johnson & Johnson COVID-19 vaccine resulted in long-lasting protection for up to six months against COVID-19 breakthrough infections, hospitalizations, and intensive care unit (ICU) admissions. The new study posted on medRxiv comprehensively looked at the durability profiles for all three vaccines authorized or approved in the U.S. using the same methodology across three outcomes of interest: COVID-19 breakthrough infections, hospitalizations, and ICU admissions.

  • The study showed that the effectiveness of the Johnson & Johnson COVID-19 vaccine against breakthrough infections and hospitalizations remained durable. The mRNA vaccines (two-doses) showed waning effectiveness for hospitalizations and breakthrough infections. All three vaccines showed no evidence of waning protection against COVID-19-related ICU admissions at any point, showing strong sustained protection against critically severe disease. The study was not designed to compare the durability of vaccines.

 

Feel free to contact me with any questions and/or to discuss investment ideas.

I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman