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 catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q4 2023 edition covers Market Review, the Type of Recession we may have, and how to build Resilience in portfolios.

 

Markets

Market scorecard as of close on Friday January 5, 2024.

Country	Equity Indices	Level	1 week	YTD	2023
Canada	S&P/TSX Composite	20,938	-0.1%	-0.1%	8.1%
U.S.	S&P 500	4,697	-1.5%	-1.5%	24.2%
U.S.	NASDAQ	14,524	-3.2%	-3.2%	43.4%
Europe/Asia	MSCI EAFE	2,203	-1.5%	-1.5%	15.0%

Source: FactSet

• TSX finished higher in Friday rangebound trading, off best levels. TSX closed with a moderate 0.1% weekly decline.

• US equities mixed on Friday. Stocks continuing to struggle for gains this past week with S&P and Nasdaq snapping nine-week winning streaks.

• Following a difficult year in 2022 when the S&P 500 declined 18 percent, many economists forecast the U.S. economy would succumb to recession in 2023 due to the Fed’s very aggressive rate hike cycle, and market strategists thought this could prolong the pain for stocks. A recession has yet to pan out, large technology stocks took off, and the S&P 500 ended up posting strong 24.2 percent gains for the year – well above the 10.3 percent average annual price return since 1980.

 

Economy

Canada

• Canadian inflation numbers for November surprised to the upside, with headline Consumer Price Index (CPI) inflation at 3.1% y/y, above the consensus estimate of 2.9%. Despite the upside CPI surprise, disinflationary pressures still dominate the consumer price basket—meaning the inflation rate for these categories is declining.

• StatCan reported employment was unchanged in December. The agency noted employment growth slowed in H2 of 2023, averaging 23K per month, compared to H1 with 48K per month. Unemployment rate held steady in 5.8% in December, after five increases in the past seven months.

U.S.

• The Fed remains focused on getting inflation under control but sent a clear message in December that rate cuts are also coming into view. Indeed, with price growth trending in the right direction and signs that economic growth is slowing, the Fed is widely expected to pivot to interest rate cuts in the first half of this year. RBC Economics’ own forecast assuming the first decrease comes in Q2.

• US labour market data ended 2023 with strength. Payroll employment was up 216k in December while the unemployment rate held at 3.7% after declining to that level the prior month.

Further Afield

• Despite the economic recovery headwinds, China’s tourism data from the New Year holiday indicates a relatively stable recovery in the services sector. While tourism from mainland China to Hong Kong has risen since late 2022, the trend has stalled in the past few months. Tourism flows have shifted, with more Hong Kong residents now traveling to mainland China for weekends and holidays, reversing the historical trend.

 

 

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

 

Regards,

Shiuman