Qtrade Direct Investing

Weekly Market Pulse - Week ending August 18, 2023

Market developments

Equities:  Equity markets faced a significant decline as fears of higher rates weakened sentiment, driving key indices toward their largest weekly loss since March. The S&P 500 and MSCI World Index continued to slide, with both U.S. and global benchmarks on track for one of the worst weekly performances since the Silicon Valley Bank incident. The Nasdaq experienced a 2.6% drop, surpassing the decline seen in S&P 500 (-2.1%), as risk assets faced a widespread selloff.  

Fixed income: The Federal Reserve indicating further rate hikes to address inflation boosted Treasury yields this week. Global bonds did rebound on Friday as losses were seen as potentially overdone, with yields on US 10-year Treasuries easing slightly from recent highs and settling at 4.25%. Anticipation looms over the upcoming Jackson Hole gathering, where policymakers may shed light on their stance amid receding recession fears but persistent inflation concerns.

Commodities: Oil recorded its first weekly loss since June, slipping below $81 a barrel as low trading volumes made the market vulnerable to macroeconomic worries. Despite signs of a tight crude market, including lower US stockpiles, concerns over poor economic data and a housing slowdown in China overshadowed the positive indicators. West Texas Intermediate's aggregate open interest dropped to its lowest level since January. 

Performance (price return)

Performance table

  As of August 18, 2023

Macro developments

Canada – Inflation rose to 3.3% in July

In July, Canada's annual inflation rate reached 3.3%, surpassing market expectations of 3%. Energy prices declined less than before due to higher gasoline prices, while electricity costs rose. The mortgage interest cost index saw a significant 30.6% year-over-year increase, a major contributor to overall inflation. Groceries and traveler accommodation prices slowed, while airfares and natural gas costs continued to decrease. The Consumer Price Index (CPI) rose 0.6% in July, driven by higher travel tour prices during peak travel season.

U.S. – U.S. Retail Sales Up 0.7% in July

U.S. retail sales grew by 0.7%, marking the fourth consecutive monthly rise and surpassing the 0.4% forecast. Despite high costs, consumer spending remained strong, potentially influenced by Amazon's Prime Day. Non-store retailers led the growth with a 1.9% increase, while some sectors like furniture and electronics experienced declines. Excluding certain categories, retail sales increased by 1%.

International –UK Consumer Price Inflation Drops to 6.8% in July, Eurozone Economy Grows Modestly in Q2 2023, Japanese Economy Surges 1.5% in Q2 2023

Consumer price inflation in the UK fell to 6.8% in July 2023 from 7.9% in June, driven by lower fuel prices. The core rate, excluding volatile items, remained at 6.9%. Transport, food, furniture, recreation, and miscellaneous goods contributed to the decline. Monthly consumer prices decreased by 0.4%.

The Eurozone economy saw a 0.3% growth in Q2 2023, following a flat first quarter, aligning with initial estimates. The recovery in demand was supported by easing inflationary pressures, although higher interest rates and declining confidence still impacted the overall economy. France and Spain demonstrated steady growth (0.5% and 0.4% respectively), while Germany's economy stagnated, and Italy unexpectedly contracted by 0.3%. The annual growth rate of 0.6% was the slowest since the recession of 2020-21.

Japan's economy experienced a robust 1.5% growth in Q2 2023, exceeding predictions and marking its fastest pace since Q4 2020. The expansion was propelled by rebounding exports and declining imports, boosting net trade. While government spending and capital expenditure remained subdued, private consumption dipped due to cost pressures. Despite this growth, the economy's 2023 expansion slowed to 1.1%, reflecting global challenges. 

Quick look ahead

Chart of upcoming dates

As of August 18, 2023

Aviso Wealth Inc. (“Aviso Wealth”) is the parent company of Credential Qtrade Securities Inc. Aviso Wealth is a wholly-owned subsidiary of Aviso Wealth Limited Partnership, which in turn is owned 50% by Desjardins Financial Holdings Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.

Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc., a wholly owned subsidiary of Aviso Wealth Inc. and Member of the Canadian Investor Protection Fund.

Northwest & Ethical Investments L.P (“NEI” or “NEI Investments”) is a subsidiary of Aviso Wealth; and NEI Funds are related issuers of Credential Qtrade Securities Inc.

This material is for informational purposes only. While this material has been compiled from sources believed to be reliable, Qtrade Investor does not guarantee the accuracy, completeness, timeliness or reliability of this information. Information, figures and charts are summarized for illustrative purposes only and are subject to change without notice. All investments are subject to risk, including the possible loss of principal.