Performance
Stocks rose across the U.S. and Canada as investors took a risk-on approach to the capital markets with mounting hope for a soft landing – a scenario where inflation falls back to 2% without the economy dipping into a recession
U.S. stocks rallied on the back of declining inflationary pressures, expectations for the ending of the Federal Reserve’s rate-hiking cycle, and better-than-expected Q2 earnings from bellwether companies.
S&P/TSX Composite Index was 2.3% higher in July as 8 of its underlying sectors in the index were positive during the month
Healthcare led the index with a 21% gain
Materials, energy and financial sectors raised 6.4%, 4.1% and 3.2%
Telecommunications was the worst-performing sector declining 6.3%
Small cap stocks rose 6% in July
U.S. based stocks as measured by the S&P 500 Index posted a 2.6% gain
All sectors were in the green in July
Energy and telecommunication services leading the benchmark’s gain, rising 6.8% and 6.2%
International stocks, as measured by the FTSE Developed ex-US Index, gained 2.9% during the month, while emerging markets rose 5.2%
Currency
U.S. dollar depreciated -0.4% versus the loonie during the month
Fixed Income
Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, decreased by 1.1% during the month, while the key global investment grade bond benchmark rose 0.7%
Global high-yield issues gained 1.4%
Commodities
Turning to commodities, natural gas prices fell 5.9% during the month, while the price of a barrel of crude oil rose 15.8%.
Silver, gold and copper all had a positive month, gaining 9.5%, 2.1% and 7.1%, respectively.
Inflation
Inflation in Canada declined to 2.8% year-over-year in June, led by falling transportation costs. Inflation remained above the 2.0% target due to elevated food and shelter prices.
The Canadian economy added 59,900 jobs in June, as the nation’s unemployment rate rose to 5.4%. During July, the Bank of Canada raised its policy rate by 25 bps to 5.0% as the bank continued to see excess demand and heightened core inflation.
U.S. nonfarm payrolls increased by 209,000 in June, as the unemployment rate fell to 3.6%
The consumer price index slowed to 3.0% year-over-year in June
The Federal Reserve announced a 25-bps rate hike at its July meeting. The increase brought the U.S. policy rate to a target range of 5.25% to 5.50%, its highest level in 22 years. The U.S. economy grew 2.4% in the second quarter of 2023 from 2.0% in the previous quarter, significantly beating market expectations of 1.8%.
This document was prepared by the Investment Products & Platforms Team. The opinions expressed in this document do not necessarily reflect the opinions of iA Private Wealth Inc. The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Contents copyright by the publishers. The information contained herein may not apply to all types of investors.
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