The BIG Picture

The summer has gotten off to a reasonable start with global equities moving higher in recent weeks.

Global equities have been somewhat directionless over the past few weeks. One notable development was the Canadian inflation report for May, which was higher than expected for the first time this year.

Canadian and European equities have been weaker in recent weeks, though year-to-date gains remain respectable. Meanwhile the U.S. equity market continues to display strength, driven by the large cap technology sector.

Over the past week, Canadian banks reported their second-quarter results. Much of the focus has understandably been on the outsized stock price reactions. Typically, any moves in the Canadian bank stocks related to earnings results are relatively tame...

May has been a noticeably better month for markets.  A weaker pace of job growth and inflation numbers have rekindled hopes that the U.S. Federal Reserve may start cutting interest rates in the second half of the year.

Global equity markets finished the month of April a bit lower as they digested the gains made since last October. Markets largely spent the month grappling with sticky inflation and diminishing prospects for interest rate cuts in the U.S.

Proof point: The timing and magnitude of interest rate cuts from the Bank of Canada will be determined by domestic economic and inflation conditions and not the gap in monetary policy with the U.S. Federal Reserve or the value of the Canadian dollar....

The past few weeks have seen more meaningful activity across global equity marked by an increase in volatility. Two developments were particularly noteworthy.

Global equity markets have been somewhat directionless over the past few weeks, likely taking a breather after a reasonably good first quarter.