Market insights
Investors Group Weekly Market Commentary – September 3, 2010
Global markets see mixed results on week
A stock market rally early in the week built on positive earnings reports and some strong economic data, lost steam by week’s end on concerns about the pace of the economic recovery.
North American stock markets rallied early in the week on positive earnings reports from discount retail giant Wal-Mart, and two key home improvement retailers, Home Depot and Lowe’s. All three outlets beat earnings expectations and raised earnings forecasts. The home improvement outlets also slightly trimmed revenue forecasts on more subdued consumer spending.
In other news, the world’s largest mining company, Australian-listed BHP Billiton made a takeover bid for Canada’s biggest fertilizer producer Potash Corp. The initial bid was rebuffed by the Potash board, and the stock price has risen significantly on the expectation of a sweeter offer, with the resource-rich S&P/TSX index also moving up on the news.
Other merger activity included the recent purchase by Intel of McAfee for more than $7 billion. Increasing merger and acquisition activity signals business optimism for future growth opportunities.
Positive housing reports out of the U.S. show new home construction was up 1.7% last month and that inflation readings rose slightly in July, providing some reassurance to investors that deflation is not an immediate threat. Leading indicators also rose 0.1% in July and office supplier Staples saw its second quarter net income increase.
Advances fizzled by week’s end on a surprisingly negative jobs report that renewed worries about the resilience of the recovery. Jobless claims were unexpectedly up for the third straight week and hit the half million mark for the first time since last November. Jobs comprise an important element of any sustainable recovery because joblessness has a direct impact on consumer spending, which makes up two-thirds of economic growth in the U.S. The Federal Reserve Bank of Philadelphia general economic index also fell by 7.7% in August with readings above zero signaling growth and those in negative territory signaling contraction.
Trading has been thin due to holidays so volumes are light, but volatility is amplified in this type of environment. The markets continue to seek direction from reported economic data and are focusing on the prospects for sustainable growth going forward.
Also this week in the markets:
- New home construction up 1.7% in July
- Building permit applications fell by 3.1% last month
- Latest inflation reading rose 0.2% in July
- Producer Price index was 0.2% as expected
- Housing starts rose less than expected in July
- Industrial production rose 1.0% in July, more than expected
- U.S. producer prices rose in July
What's ahead next week:
Canada:
- Retail sales
- Weekly earnings
U.S.:
- New and existing home sales
- Durable good orders
- Gross Domestic Product
- Corporate profits
- Consumer sentiment
This week's market closing values
Level |
Change |
1-week |
YTD |
1-year |
5-year |
|
EQUITY INDICES |
CAD |
CAD |
CAD |
CAD |
||
|---|---|---|---|---|---|---|
| S&P/TSX | 12,144.92 | + 265.20 | + 2.23% | + 3.40% | + 11.20% | + 2.43% |
| S&P 500 | 1,104.51 | + 39.92 | + 2.09% | - 2.47% | + 3.65% | - 4.52% |
| DJIA | 10,447.93 | + 297.28 | + 1.28% | - 1.35% | + 5.26% | - 2.63% |
| FTSE 100 | 5,428.15 | + 226.59 | + 2.14% | - 5.62% | + 0.70% | - 5.67% |
| CAC 40 | 3,672.20 | + 164.76 | + 4.13% | - 17.42% | - 12.10% | - 5.60% |
| DAX | 6,134.62 | + 183.45 | + 2.52% | - 8.81% | - 1.57% | + 2.66% |
| Nikkei | 9,114.13 | + 123.07 | + 0.73% | - 6.81% | - 7.93% | - 3.83% |
| Hang Seng | 20,971.50 | + 374.15 | + 0.28% | - 5.81% | - 0.35% | + 3.80% |
CURRENCY RETURNS |
CAD |
Change |
||||
|---|---|---|---|---|---|---|
| US$ | 1.0383 | - 0.0125 | - 1.19% | - 1.41% | - 5.77% | - 2.65% |
| Euro | 1.3390 | - 0.0021 | - 0.16% | - 11.24% | - 14.73% | - 2.10% |
| Yen | 1.2308 | - 0.0021 | - 0.17% | + 8.74% | + 3.46% | + 2.60% |
CANADIAN TREASURIES |
Yield |
Change |
COMMODITIES |
USD |
Change |
|
|---|---|---|---|---|---|---|
| 3-month | 0.71 | + 0.03 | Oil | $74.34 | - $0.83 | |
| 5-year | 2.21 | + 0.06 | Gold | $1,246.80 | + $8.70 | |
| 10-year | 2.95 | + 0.08 | Natural Gas | $3.74 | - $0.02 |
This Market Commentary is published by Investors Group. It represents the views of our Portfolio Managers, and is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by Investors Group or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, Investors Group, cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein.
Please read the mutual fund's prospectus before investing. Commissions, trailing commissions, management fees and other expenses may be associated with mutual fund investments. There is no guarantee that the fund will maintain its net asset value or that the full amount of your investment will be returned to you. Past performance may not be repeated.
© Copyright 2010 Investors Group Inc. Reproduction or distribution of this commentary in any manner without the express written consent of Investors Group is strictly prohibited. Please read Conditions of Use for more information concerning authorized uses of this document.
