Performance
Stocks rebounded in May across Canada and the U.S. as strong earnings numbers eased investor fears about inflation and potentially delayed interest rate cuts.
The S&P/TSX Composite Index rose, but experienced volatility due to commodity prices.
In the U.S., technology stocks pushed major equity indices to new all-time highs during the month, with more than half of the S&P 500 Index’s gains coming from four mega tech stocks.
Canada’s benchmark S&P/TSX Composite Index gained 2.6% in May, as nine of the benchmark’s underlying sectors were positive during the month.
The gain was led by materials and utilities names, with gains of 6.1% and 5.6%, respectively.
Healthcare and information technology were the only detractors, with losses of 15.6% and 6.2%, respectively.
Small cap stocks, as measured by the S&P/TSX SmallCap Index, rose 2.5% in May.
U.S.-based stocks, as measured by the S&P 500 Index, rose 3.9% in May
Information technology and utilities saw the month’s largest increases, gaining 9.1% and 7.6%, respectively.
Energy and consumer discretionary were the only sectors in the red, falling 1.8% and 0.6%, respectively.
International stocks, as measured by the FTSE Developed ex US, gained 2.1% during the period, while emerging market stocks were flat.
In Europe the real estate and utilities sector led the gains in the run-up to the European Central Bank meeting in June
From style perspective, value stocks slightly outperformed growth names, while small caps outpaced their mid- and large-cap counterparts
Fixed Income
The investment grade fixed income indices we follow were up in May.
Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, gained 1.8% for the month
The key global investment grade bond benchmark rose 1.3%.
Global high-yield issues gained 1.1%.
Inflation
Inflation in Canada moved lower in April to 2.7% year-over-year, matching expectations.
The broad-based deceleration was led by food prices, services and durable goods.
The Canadian economy added 90,000 jobs in April, as the nation’s unemployment rate stayed flat at 6.1%.
The Bank of Canada announced its first rate cut in 4 years June 5th taking the key interest rate to 4.75% from 5% (25 bps)
The BoC's next scheduled announcement is July 24th 2024 regarding its interest rates
Commodities
Turning to commodities, natural gas rallied 29.9% during the month, while the price of a barrel of crude oil fell 6.0%.
Silver, gold and copper all had a positive month, with respective gains of 15.3%, 0.9% and 0.8%.
Information provided by iA Private Wealth
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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