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Inflation and the Economy
November proved to be an exceptional month for both stocks and bonds as the expectation that the Federal Reserve is nearing the conclusion of its hiking cycle became further embedded
Investors digested more economic data that pointed towards a soft landing for the U.S. economy, including higher-than-expected U.S. Q3 GDP growth and a further drop in inflation.
Inflation in Canada fell to 3.1% year-over-year in October, led by declines in costs for food and transportation.
The Canadian economy created 17,500 jobs in October, as the nation’s unemployment rate rose to 5.7%
The Canadian economy contracted by 1.1% annually in the third quarter of 2023, marking its first decline since the second quarter of 2021.
The Bank of Canada’s key interest rate remained steady for the third consecutive month at 5%.
Performance
From a sector standpoint information technology and real estate sector posted the largest gains
From a style perspective growth stocks outperformed value stocks
The S&P 500 Index performed remarkably well, marking its second-best November in the last four decades.
Canada’s benchmark S&P/TSX Composite Index was 7.2% higher in November, as all of its underlying sectors were positive during the month
The information technology sector was the largest contributor to the index return, with a rise of 27.3% in November
The financials, real estate and telecommunication services sectors also rose by 9.8%, 7.8% and 7.1%, respectively.
Small-cap stocks, as measured by the S&P/TSX SmallCap Index, were up 4.6% for the month.
Commodities
Commodities contracted from October
Oil and natural gas prices fell during the month due to expectations of lower demand due to high storage levels and mild weather in Europe
Natural gas prices fell 21.6% during the month, while the price of a barrel of crude oil fell 6.2%.
Copper, silver and gold had a positive month, rising 4.9%, 10.2% and 2.2%, respectively.
U.S.
The U.S. dollar fell by 2.3% versus the loonie during the month, dampening returns of foreign markets from a Canadian investor’s standpoint.
U.S.-based stocks, as measured by the S&P 500 Index, rose 6.6% in November
All but one of the underlying sectors were in the green for the month, with the information technology and real estate sectors as the leading contributors, gaining 10.3% and 9.9%
Energy was the only sector in the red, falling 3.7%.
Fixed Income
The investment grade fixed income indices we follow were up in November
Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, rose 4.3% during the month
The key global investment grade bond benchmark and global high-yield issues were up 5.0% and 4.8%, respectively
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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