Qtrade Direct Investing

Weekly Market Pulse - Week ending June 7, 2024

Market developments

Equities: U.S. stocks held near all-time highs, after chipmakers came off session lows following a stronger-than-expected jobs report. The very strong payrolls report should be seen as net positive for equity markets, although the upside to wages will get investors concerned about inflation again and makes the Federal Open Market Committee (FOMC) meeting next week even more important. Semiconductors had a strong week as Taiwan Semiconductor Manufacturing Co. advanced after the company reported May sales that are seen as positive.

Fixed Income: It was a volatile week for Fixed Income markets as both the ECB and BOC cut rates by 25bps. However, global Fixed Income markets sold off on Friday as the U.S. jobs report made traders dial back their bets on Federal Reserve rate cuts. Yields across developed markets jumped, led by the U.S., where 2-yr treasuries yields were up over ~15bps on the day. 

Commodities: Oil prices posted a weekly decline as algorithmic traders accelerated selling pressure, this came after OPEC+ announced a plan to loosen its production curbs. However, prices rebounded from their lows after Saudi Arabia's Energy Minister reiterated that the production hike can be paused or reversed, depending on market conditions.

Performance (price return)

Performance table

Source: Bloomberg, as of June 7, 2024

Macro developments

Canada – S&P Global Canada Composite PMI Rises, Bank of Canada Cuts Interest Rates, Canadian Unemployment Rate Increases

The S&P Global Canada Composite PMI increased to 50.6 in May 2024, signaling the first expansion in a year. Service sector activity rose while manufacturing output continued to decline. New business and staffing levels grew, but operating expenses and output charges increased, especially in services. Future confidence dipped to a four-month low.

The Bank of Canada reduced its key interest rate by 25 basis points to 4.75% in June 2024, with further cuts expected if inflation continues to slow. Underlying inflation measures dropped below 3%, and Q1 GDP growth was weaker than anticipated. Despite softer economic conditions, risks from geopolitical tensions and a hawkish US Federal Reserve remain.

Canada's unemployment rate rose to 6.2% in May 2024, the highest since October 2021. The number of unemployed grew by 28,000, with significant increases in core working age and older populations. Net employment increased by 26,700, and hourly wage growth accelerated to 5.2%.

U.S. – U.S. ISM Services PMI Surges, U.S. Job Market Gains, U.S. Unemployment Rate Rises

The U.S. ISM Services PMI jumped to 53.8 in May 2024, marking the highest level in nine months. Growth was driven by higher business activity, faster new orders, and slower supplier deliveries, despite declining employment. Inflation and interest rates remain significant concerns for businesses.

The U.S. economy added 272,000 jobs in May 2024, the most in five months, surpassing forecasts. Employment gains were seen in health care, government, leisure and hospitality, and professional services, while other sectors showed little change. Revised data for March and April showed 15,000 fewer jobs than previously reported.

The U.S. unemployment rate increased to 4% in May 2024, the highest since January 2022. The number of unemployed rose by 157,000, while employment fell by 408,000. The labour force participation rate and the employment-population ratio both decreased. Average hourly earnings grew by 4.1% year-over-year, exceeding market expectations.

International – Eurozone Retail Sales Decline, Eurozone Economy Grows in Q1, ECB Lowers Interest Rates, China's PMI Increases

The Eurozone's unemployment rate dropped to a record low of 6.4% in April 2024, with significant decreases in youth unemployment. Spain continued to have the highest unemployment rate, while Germany had the lowest. The overall jobless rate was slightly higher than a year earlier at 6.5%.

The annual inflation rate in the Eurozone rose to 2.6% in May 2024, the first increase in five months, exceeding forecasts. Energy prices rebounded and service prices increased, while inflation for food, alcohol, tobacco, and non-energy goods slowed. Core inflation also rose to 2.9%, higher than expected.

Japan's retail sales grew by 2.4% year-on-year in April 2024, accelerating from March and exceeding market forecasts. The growth was driven by increased sales in machinery, non-store retail trade, and pharmaceuticals. However, automobile sales and textile/clothing sales declined. Monthly sales rebounded by 1.2% from a fall in March.

China's Caixin General Composite PMI rose to 54.1 in May 2024, the highest since May 2023, marking the seventh consecutive month of growth. Both manufacturing and services saw accelerated output growth, with a slight rise in employment. Input costs reached a 23-month high, and output charges rose. Sentiment weakened due to rising costs, calling for stronger economic policies.

Quick look ahead

Chart of upcoming dates

As of June 7, 2024

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This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. This document is published Aviso Wealth and unless indicated otherwise, all views expressed in this document are those of Aviso Wealth. The views expressed herein are subject to change without notice as markets change over time.