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 Q2 2024 edition covers Market Review for year-to-date 2024, featuring an article on the Role of Artificial Intelligence.

 

Markets

Market scorecard as of close on Friday July 12, 2024.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	22,674	2.8%	8.2%
U.S.	S&P 500	5,615	0.9%	17.7%
U.S.	NASDAQ	18,398	0.2%	22.6%
Europe/Asia	MSCI EAFE	2,418	2.3%	8.1%

Source: FactSet

• TSX closed higher in Friday afternoon trading, bit off best levels but still at new all-time high. Most sectors higher. Canadian equities finished ended higher in Wednesday afternoon trading, near best levels.

• US equities finished higher in Friday, though ended off best levels as market pared gains into the close. Nasdaq logged its sixth-straight weekly gain despite a notable Thursday selloff on the post-CPI rotation out of big tech. S&P 500 was up 0.9% for the week, and 18% year-to-date.

 

Economy

Canada

• Lagging net exports remain a drag on Canadian real GDP growth so far this year. Canada’s merchandise trade deficit widened to CA$1.9 billion in May from CA$1.3 billion in April.

• The Bank of Canada’s (BoC) quarterly Business Outlook Survey (BOS) and June’s inflation data will be the last major data releases before the BoC’s next interest rate announcement on July 24. We expect a slowdown in inflation after an upside surprise in May and for the BOS to look soft enough to justify a second consecutive 25 basis point interest rate cut from the BoC at that meeting.

U.S.

• The release of the June Consumer Price Index figures on July 11 added to the positive sentiment. The headline inflation reading fell by 0.1% m/m, and the core figure excluding food and energy increased by only 0.1%. Both figures were softer than market forecasts and represented annual inflation rates of 3.0% and 3.3%, respectively.

• The monthly U.S. jobs report, released on July 5, gained less attention than usual thanks to the timing of its release near the Independence Day holiday. While the headline jobs increase of 206,000 new jobs looked good on the surface, prior months’ data was revised down, and a closer look at the composition of job gains showed particularily weak job growth in the economically sensitive cyclical sectors (see chart). In our view, this adds fuel to the fire for the argument for the Fed to cut interest rates more rapidly than previously expected.

Further Afield

• The UK economy is faring much better than economists’ consensus expectations. GDP growth surprised to the upside, rising 0.4% m/m in May compared to forecasts of 0.2% m/m. While the month-over-month figures can be volatile, the underlying pace of growth, especially in the private sector domestic economy, is rebounding.

• The 20th Central Committee of the Communist Party of China will hold its Third Plenum July 15–18. The Third Plenum typically establishes a policy framework that could shape the country’s reform and development directions for the medium to long term.

 

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