Media Room
The week in the markets –
June 23, 2023
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A little breather for the rally
This was a short week due to a national holiday in the U.S., which contributed to what was already a slow week in the markets. The S&P 500 Index appeared to take a breather. On the other side of the world, international market returns were hampered by additional central bank action on the inflation front. The yield on two-year U.S. treasury bills returned to the highs of March, following a couple of pieces of news that surprised the market. Firstly, U.S. Federal Reserve Chair, Jerome Powell took a hawkish stance and suggested the U.S. might need one or two additional interest rate increases this year. Then, the Bank of England (BoE) increased its tightening measures with a 50-basis-point hike and warned about further increases. While the BoE decision was unexpected, it can’t be deemed unjustified, given that inflation in the U.K. has barely subsided and remains around 8%.
In light of this macroeconomic backdrop, concerns with valuations and the interest rate outlook, “U.S. equities' performance is not inspiring high conviction in sustained strength,” according to a survey by Bank of America. Twenty-five per cent of global money managers reported being underweight U.S. stocks in their asset allocation, which is fairly high number. Trading volume is down 20% year-over-year, which tends to exacerbate stock market moves.
In sector news, robust data on housing starts failed to trigger an increase in the S&P Homebuilders' Select Industry Index. Earnings reports from major players in the sector were mixed, however, the index has so far had a remarkable year, with a less-discussed, but very strong rally.
On the energy front, oil rig counts continued their downward trend in the U.S. This trend is considered a probable cause for the increase in national jobless claims, with a high number of them coming out of Texas. Interestingly, production remains high and has not replicated the drop we’ve seen in the number of rigs. With the higher cost of capital caused by rate hikes (and expectations of further increases), refiners are opting to hold less inventory, and the market is anticipated to tighten in the second half of the year. As a side note, despite repeated statements about replenishing the Strategic Petroleum Reserve, the Biden administration drew 1.7 million barrels from it. This action was taken to alleviate inflationary pressures and keep gasoline prices lower.
This week's market closing value - week ending June 23, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | 1-week | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 19,431.66 | -550.26 | -2.75% | 0.31% | 3.82% | 3.39% |
| S&P 500 | 4,352.48 | -65.78 | -1.58% | 10.83% | 16.38% | 9.45% |
| DJIA | 33,728.69 | -572.34 | -1.76% | -0.87% | 11.59% | 6.40% |
| FTSE 100 | 7,461.87 | -180.85 | -3.21% | 2.64% | 11.95% | -1.52% |
| CAC 40 | 7,163.42 | -225.23 | -3.52% | 9.66% | 27.89% | 4.32% |
| DAX | 15,829.94 | -527.69 | -3.70% | 12.67% | 28.77% | 3.18% |
| Nikkei | 32,781.54 | -924.54 | -4.16% | 11.71% | 19.32% | 2.05% |
| Hang Seng | 18,889.97 | -1,150.40 | -5.96% | -7.28% | -9.67% | -8.50% |
| CURRENCY RETURNS | CAD | Change | 1-week | YTD | 1-year | 5-year |
|---|---|---|---|---|---|---|
| USD | 1.3190 | -0.0012 | -0.09% | -2.58% | 1.49% | -0.12% |
| Euro | 1.4367 | -0.0070 | -0.48% | -0.89% | 5.04% | -1.46% |
| Yen | 0.0092 | -0.0001 | -1.46% | -11.07% | -4.74% | -5.34% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.84 | 0.00 | Oil | $69.29 | -$2.40 |
| 5-year | 3.76 | 0.08 | Gold | $1,919.64 | -$36.44 |
| 10-year | 3.36 | 0.01 | Natural Gas | $2.74 | $0.12 |
| CANADIAN PRIME RATE |
|---|
| 6.95% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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