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 Thursday April 14, 2022. Markets were closed on Good Friday April 15.

Equity Indices	Level	1 week	YTD	52-week
S&P/TSX Composite	21,856	-0.1%	3.0%	13.1%
S&P 500	4,393	-2.1%	-7.8%	5.3%
NASDAQ	13,351	-2.6%	-14.7%	-4.9%
Euro Stoxx 50	3,849	-0.3%	-10.5%	11.7%
Hang Seng	21,518	-1.6%	-8.0%	-25.3%

Source: Bloomberg, RBC Wealth Management

• TSX ended slightly higher in Thursday afternoon trading. Most sectors higher, energy, communication services, materials and industrials the leaders with tech and healthcare the laggards.

• US equities finished lower in Thursday trading, near worst levels. Gold finished down 0.5%. WTI crude settled up 2.6% after news the EU may be moving toward a phased-in ban on Russian oil. Canadian dollar lower against USD.

• European equity markets are closed today for the Easter Monday holiday.

 

Economy

Canada

• The Bank of Canada (BoC) delivered its second policy rate hike of 2022, lifting rates by 50 bps (half a percent). This is the first time since May 2000 that the BoC has announced a rate increase of that magnitude. Recent economic data would argue in favour of such a pace of monetary tightening. The labour market in particular was cited in the announcement. With employment now hovering above pre-pandemic levels and the unemployment rate dropping to its lowest level on record, businesses have continued to report difficulty meeting demand due to worsening labour frictions.

• The BoC revised its inflation forecast higher to an average of just under 6% in the first half of 2022, as the usual culprits (energy, food, and supply chain disruptions) continue to put upward pressure on prices.

• The Canadian labour market is continuing to fire on all cylinders. Despite coming in just shy of consensus expectations, the increase in employment was still able to push the unemployment rate down to 5.3%, its lowest level since comparable data became available in the mid-1970s.

U.S.

• Consumer prices accelerated by the fastest pace since 1981, reinforcing the Fed’s intention to raise rates more aggressively to curb inflation. The Consumer Price Index rose 8.5% in March from a year earlier following a 7.9% gain in February. Soaring gasoline prices were the primary driver of higher inflation followed by rising food costs.

• Many economists believe March will mark the peak inflation rate this year given it captures the initial impact from the Russian invasion of Ukraine.

Further Afield

• Speed, sequencing, and flexibility were in focus at Thursday’s European Central Bank (ECB) policy meeting. The ECB is in a difficult position on how much it can tighten to combat inflation given Europe’s economic sensitivity to the Russia-Ukraine war. ECB’s Lagarde recognised this in her press conference and explained that actions currently being considered by the U.S. Federal Reserve, such as balance sheet reduction, would not be appropriate for the ECB.

• New Zealand, South Korea, and Singapore tightened their monetary policies last week. New Zealand delivered a larger-than-expected 50 basis point rate hike. The Bank of Korea’s Monetary Policy Board voted to raise the benchmark interest rate by a quarter of a percentage point to 1.50%, the highest since August 2019.

• According to China’s National Bureau of Statistics, the world’s second largest economy beat expectations in the first quarter of this year, growing 4.8%. This comes despite the challenging zero-covid policies that have hampered consumption and economic activity in some of the most crucial commercial zones in China in recent months.

 

Notes About Companies in Model Portfolio

• Apple (AAPL) suppliers avoided 13.9M metric tons of carbon emissions in 2021 with over 10gW of renewable energy operational out of 16gW in total commitments in coming years. Dozens of suppliers recently announced commitments to transition to clean energy, accelerating Apple's progress to become carbon neutral across its entire supply chain by 2030. Apple is investing directly in renewable projects around the world, including nearly 500 mW of solar and other renewable projects in China and Japan to cover a portion of upstream emissions.

• BlackRock (BLK) reports Q1 EPS as adjusted $9.52 vs FactSet $8.70. BLK reports Q1 revenue $4.70B vs FactSet $4.67B. Operating income as adjusted $1.82B vs FactSet $1.81B. $114B of quarterly long-term net inflows; $86B of quarterly total net inflow.

• Costco Wholesale (COST) increases quarterly dividend by 13.9% to $0.90 from $0.79. According to Value Line, the company reported that net sales for March came in at an eye-opening $21.61 billion, an increase of 18.7% year over year.

• Procter & Gamble (PG) appoints Jon Moeller as Chair, effective 1^st July. Moeller assumes the position in addition to his role as President and CEO following the retirement of current Executive Chairman David Taylor.

  • PG increases quarterly dividend by 5.0% to $0.9133 from $0.8698. The new annualized dividend yield is 2.30% vs prior annualized dividend yield of 2.19%.

• UnitedHealth Group’s (UHN) first quarter 2022 revenues grew $10 billion or 14.2% to $80.1 billion year-over-year, including diversified, double-digit growth at both Optum and UnitedHealthcare. First quarter 2022 earnings from operations were $7 billion and adjusted net earnings were $5.49 per share. Year-over-year earnings growth was led by Optum Health, due to its positive impact for patients and the accelerating expansion of its value-based care delivery initiatives.

 

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Shiuman