Stocks rose in June, ending a quarter marked by an AI-sparked tech rally
The S&P/TSX Composite Index and S&P 500 Index posted gains for the third consecutive quarter, while U.S. small caps underperformed large caps due to lower earnings and exposure to cyclical sectors
Canada’s benchmark S&P/TSX Composite Index was up 3.0% in June and posted a 0.3% gain for the second quarter of 2023
Four of the benchmark’s underlying sectors were positive during the quarter, led by information technology with a 16.5% return. The materials sector was the largest detractor for Q2, with a decline of 7.4%. Small-cap stocks, as measured by the S&P/TSX SmallCap Index, fell 5.2% for the quarter
The U.S. dollar depreciated by 2.0% versus the loonie during the quarter, slightly dampening the returns of foreign markets from a Canadian investor’s standpoint
U.S.-based stocks, as measured by the S&P 500 Index, rose 3.5% in June, and finished the quarter higher by 5.9%
The benchmark’s quarterly gain was led by information technology and consumer discretionary, with respective returns of 14.4% and 11.8%
Utilities and energy were the main detractors for the quarter, declining by 5.4% and 3.9%, respectively
International stocks, as measured by the FTSE Developed ex US Index, fell 0.1% during the quarter, while emerging markets declined 2.6%.
Fixed Income
Global high yield outperformed Canadian and global investment grade bonds
Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, were down 0.7% during the quarter. The key global investment grade bond benchmark was down 1.5%, while global high-yield issues rose 1.6%
Commodities
Natural gas rose 26.3% in the quarter, while the price of a barrel of crude oil shed 6.6% in the same period
Gold, copper and silver all had a negative quarter with respective losses of 2.0%, 8.6% and 5.6%.
Inflation
Inflation in Canada was 3.4% year-over-year in May, from 4.4% year-over-year in April – the lowest level since 2021
The Canadian economy lost over 17,000 jobs in May, as the nation’s unemployment rate rose to 5.2%
The Bank of Canada raised its key interest rate to 4.75% in June, ending the conditional pause that started in January.
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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