| Your weekly commentary – For the week ended November 24 | | Global equity markets ended largely flat over the week ended November 24. Without any major catalysts over the week, investors were treading carefully as they awaited the final interest rate announcements from major central banks in the upcoming weeks. The S&P/TSX Composite Index finished lower, dragged down by the Consumer Discretionary sector. U.S. equities finished higher over a short week due to the Thanksgiving holiday. Gold prices advanced, while the price of oil edged lower. Yields on 10-year government bonds in Canada and the U.S. rose over the week. | Deficits to continue in Canada's budget update- The Canadian federal government gave its budget update, which showed it ran a deficit of $40.0 billion in the recent fiscal year, which was largely in line with its previous expectations.
- Looking ahead, the government expects net new costs of $20.8 billion over the next six years, with increased spending on housing and clean energy initiatives.
- The government seeks to bring down the country's debt-to-GDP ratio, but it expects the pace of that decline to be relatively slow given the significant debt it already holds and spending requirements.
- The Canadian government announced new measures to help increase the supply of housing, looking to improve affordability.
- The government doesn't expect to balance the budget but anticipates lowering the deficit to $18.4 billion in fiscal 2029.
| Developed economies see a slowdown in inflation- Canada's inflation rate slowed considerably to 3.1% in October from 3.8% in September, which matched economists' expectations.
- October's rate was the lowest since June, largely as the result of a drop in energy prices. Price increases for food and personal care products slowed. The core inflation rate, which strips out more volatile items such as energy and gasoline, softened in October, giving some relief to Canadian households.
- With inflation and economic conditions declining, the Bank of Canada ("BoC") may be poised to hold its key interest rate steady at 5.00% at its December meeting. As inflation moves closer to the BoC's 2% target and economic growth slows, expectations for the BoC to cut rates next year are heightening.
- Canada isn't the only country seeing inflationary pressures ease. Inflation has subsided, while economic growth has become sluggish, in many developed economies in recent months, including the U.S., Europe and the U.K. This has opened the door for the possibility of rate cuts by the respective central banks next year.
- Largely in response, government bond yields across major economies have pulled back in recent weeks.
| U.S. home sales fall to multi-year low- Sales of existing homes in the U.S. tumbled by 4.1% to 3.79 million in October, the lowest level since August 2010.
- October's decline was the sharpest monthly drop since November 2022.
- A lack of supply, as well as still relatively muted demand, contributed to the sharp decline in home sales over October.
- More recent data from the Mortgage Bankers Association showed mortgage rates have dropped in recent weeks while mortgage applications have risen. This suggests demand may be picking up amid expectations the U.S. Federal Reserve Board will hold steady at its next meeting.
| U.K. business activity expands- A preliminary estimate of the S&P Global/CIPS U.K. Composite Purchasing Managers Index showed business activity in the U.K. expanded in November for the first time since July.
- The increase was driven by an expansion in services sector activity, which benefited from an uptick in new business. Conversely, the manufacturing sector contracted again in November, but at a slightly slower pace than in October.
- Elsewhere, European business activity contracted yet again, with weakness across both the manufacturing and services sectors.
- Economic activity in the U.K. and Europe has stalled in recent quarters, largely because of tight financial conditions weighing on households and businesses.
| | | | Equity markets | Level | YTD | 1 Yr | | S&P/TSX Composite Index C$ | 20,103.11 | 3.70% | -1.18% | | MSCI USA Index US$ | 4,339.65 | 19.21% | 13.54% | | MSCI EAFE Index US$ | 2,122.13 | 9.17% | 7.88% | | MSCI Emerging Markets Index US$ | 980.33 | 2.50% | 3.68% | | MSCI Europe Index US$ | 1,923.32 | 11.07% | 9.83% | | MSCI AC Asia Pacific Index US$ | 161.48 | 3.69% | 4.29% | | Fixed income market | Level | YTD | 1 Yr | | FTSE Canada Universe Bond Index C$ | 1,071.08 | 1.89% | 0.05% | | FTSE World Broad Investment Grade Bond Index US$ | 204.28 | 1.02% | 0.37% | | Currency | Level | YTD | 1 Yr | | CAD/USD | 0.7334 | -1.04% | -2.62% | | Commodities | Level | YTD | 1 Yr | | West Texas Intermediate (US$/bbl) | 75.54 | -5.88% | -3.08% | | Gold (US$/oz) | 2,000.82 | 9.69% | 13.99% | | Silver (US$/oz) | 24.33 | 1.57% | 13.02% |
| | Market performance – as at November 24, 2023 | | | | | |
|
| | Canada Life and design, and Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company. If you do not want to receive emails from Canada Life Investment Management Ltd., you can unsubscribe. Canada Life may still email you with communications related to doing business with Canada Life.
This commentary represents Canada Life Investment Management Ltd.'s views at the date of publication, which are subject to change without notice. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This commentary is intended as a general source of information and is not intended to be a solicitation to buy or sell specific investments, nor tax or legal advice. Before making any investment decision, prospective investors should carefully review the relevant offering documents and seek input from their advisor. You may not reproduce, distribute, or otherwise use any of this article without the prior written consent of Canada Life Investment Management Ltd. Privacy, legal, copyright and trademark information
FTSE Disclaimer | S&P Disclaimer | MSCI Disclaimer | | |
|
Printer-friendly version
PDF version
