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.

You can view the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q3 2023 edition covers Market Review, Concentration of Returns in U.S. equities and Estate Planning Basics.

 

Markets

Market scorecard as of close on Friday September 1, 2023.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	20,545	3.6%	6.0%
U.S.	S&P 500	4,516	2.5%	17.6%
U.S.	NASDAQ	14,032	3.2%	34.1%
Europe/Asia	MSCI EAFE	2,104	2.4%	8.2%

Source: FactSet

• TSX closed higher in Friday afternoon trading, near best levels. Most sectors higher, with communication services the lone decliner. TSX posted a 3.6% weekly gain, best weekly performance in two months.

• US equities ended mostly higher in Friday trading, with the afternoon very quiet ahead of Monday's Labor Day holiday. Despite stocks coming off best morning levels, major indices ended with good weekly gains; S&P up 2.5% for the week.

 

Economy

Canada

• Canadian investors are gearing up for the Bank of Canada’s (BoC’s) Sept. 6 policy rate announcement following 25 basis points (bps) hikes in June and July that brought the overnight lending rate to 5.0%, its highest level since 2001. Market pricing suggests bond investors are nearly fully convinced the incremental tightening phase of monetary policy is now complete.

• Canada Q2 GDP unexpectedly declined 0.2% (annualized), well below prior estimate for 1.2% growth. Slower household consumption and a potential slowdown in the real estate sector are possible sources of weakness for the Canadian economy in light of elevated household debt and interest rate sensitivity.

U.S.

• The number of U.S. job openings fell during July to the lowest level since early 2021, marking the sixth decline in the past seven months, as demand for workers continues to cool. We believe these conditions are likely to fuel optimism that policymakers can achieve an economic soft landing and avoid a spike in unemployment.

• American consumer confidence dropped in August by the largest percentage in two years, pushed down by multiple factors including higher borrowing costs, elevated gasoline prices, and fewer job opportunities.

 

Further Afield 

• The German economy, the sixth largest in the world, appears to have lost its mojo. The export powerhouse, once leading the region’s growth, has become a laggard. The coalition government introduced new tax incentives for investments in energy efficiency, as well as R&D, valued at some €7 billion (0.02% of GDP). The government also announced that half of the €200 billion it pledged earlier to finance the green transition would be available next year.

• China has pledged to bolster policy support and accelerate government spending in response to the challenges faced by its recovering economy. China’s biggest state-owned banks are considering lowering deposit rates for at least the third time. China cut the stamp duty on stock trading by 50% on Monday and lowered margin requirements for investors to buy securities to 80% from 100% to boost the struggling market.

 

Notes About Companies in Model Portfolio

• Intact Financial (IFC) estimate that the catastrophe losses incurred to date in Q3-2023 from wildfires and other weather events amount to approximately $570M pre-tax, or $2.40 per share. Given that the wildfires are still active, actual losses may differ from this estimate. The company will issue an update in early October if catastrophe losses increase materially by the end of the quarter.

 

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