Media Room
The week in the markets –
September 1, 2023
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Running against the wind
- U.S. jobs data softening.
- Patience expected from the U.S. Federal Reserve, with core inflation stabilizing.
- Cracks in Canadian consumer spending with slower economic growth.
The U.S. Bureau of Labor’s latest Job Openings and Labor Turnover Survey (JOLTS) came in lower than expected, declining to 8.83 million jobs for the end of July, with the pace of hiring slowing. The number of job openings has declined 26% since peaking in March 2022, with the labour force participation rate for 15–64-year-olds at its highest level in history, with nearly 84% of the working age population actively seeking work or currently employed. The U.S. economy gained 187,000 jobs in August, slightly lower than the previous month, while unemployment nudged higher to 3.8%. This increase is attributed to strikes in Hollywood and a failed trucking company.
The U.S. Federal Reserve’s (the Fed) preferred measure of underlying inflation posted the smallest back-to-back increases since late 2020 (encouraged by a boost in consumer spending), feeding expectations that the economy may avert a recession and have a soft landing. On a month-over-month basis, the core personal consumption expenditures (PCE) price index (which strips out the more volatile food and energy components) rose by 0.2% in July, and the overall PCE price index also increased by 0.2%. These subdued inflation figures suggest that the Fed has made progress in taming price pressure over the past year.
U.S. quarterly annualized gross domestic product (GDP) came in below expectations, at 2.1% (versus 2.4% in Q2), suggesting that the economy is experiencing slower growth. One example of slower activity can be seen with U.S. discount retailer Dollar General, which missed earnings expectations for the quarter and anticipates earnings to decline in the range of 22-34% for the year, compared to previous forecasts of an 8% drop. Retailers are taking action to accelerate the pace of inventory reduction as they cite softer sales trends.
Canadian gross domestic product came in lower than expected, with Q2 GDP contracting by 0.2% on an annualized basis, from a gain of 2.6% the previous quarter. The slower Canadian economic growth is starting to show up in the recent earnings results of Canadian banks. Softer earnings and higher loan loss provisions are a reflection of the state of consumers.
The trend this week in markets is bad news is good news, as bonds and stocks rose amid signs that the job market and economic activity are cooling. As we look ahead to next week, the Bank of Canada’s decision for the overnight lending rate is expected to be a pause at 5%.
Listen to this week’s podcast for further insights.
This week's market closing value - week ending September 1, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 20,540.01 | 677.01 | 3.41% | 6.03% | 7.30% | 4.78% |
| S&P 500 | 4,512.02 | 99.06 | 2.24% | 18.47% | 17.60% | 10.16% |
| DJIA | 34,838.01 | 491.05 | 1.42% | 5.58% | 13.78% | 6.95% |
| FTSE 100 | 7,464.54 | 125.96 | 1.70% | 4.77% | 17.70% | 0.35% |
| CAC 40 | 7,296.77 | 67.17 | 0.67% | 13.96% | 35.45% | 5.51% |
| DAX | 15,840.34 | 208.52 | 1.08% | 15.02% | 40.48% | 4.42% |
| Nikkei | 32,710.62 | 1,086.34 | 3.57% | 13.07% | 17.26% | 2.53% |
| Hang Seng | 18,382.06 | 425.68 | 2.35% | -7.14% | -2.99% | -7.22% |
| CURRENCY RETURNS | CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3601 | -0.0001 | -0.01% | 0.46% | 3.39% | 0.85% |
| Euro | 1.4656 | -0.0037 | -0.25% | 1.10% | 12.01% | -0.63% |
| Yen | 0.0093 | 0.0000 | 0.13% | -9.80% | -0.84% | -4.55% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 5.07 | -0.05 | Oil | $85.90 | $5.87 |
| 5-year | 3.84 | -0.20 | Gold | $1,940.57 | $26.47 |
| 10-year | 3.56 | -0.14 | Natural Gas | $2.75 | $0.20 |
| CANADIAN PRIME RATE |
|---|
| 7.20% |
*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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