“We Do Not Remember Days, We Remember Moments” -Cesare Pavese
Markets Pull Back on GDP Data
North American stock markets closed in the red in a decline that followed the release of disappointing economic growth figures on both sides of the border. The S&P/TSX composite index finished the last trading day of May down 92.91 points at 15,014.09, with the energy sector helping to limit the damage as oil prices turned sharply higher. The loonie lost 0.01 of a U.S. cent to 80.41 cents. Statistics Canada says the economy contracted at an annual pace of 0.6 per cent in the first three months of the year as weaker oil prices had a more severe impact than economists expected. It is the first time real GDP growth has dipped below zero since the fourth quarter of 2011 and the biggest slide into negative growth since the second quarter of 2009.
The U.S. economy also contracted in the first quarter with gross domestic product weakening 0.7 per cent, far worse than the government’s initial estimate of growth of 0.2 per cent. The Dow Jones industrial average closed down 115.44 points at 18,010.68, while the Nasdaq fell 27.95 points to 5,070.03 and the S&P 500 declined 13.40 points to 2,107.39. In commodities, oil prices got a boost after data showed U.S. crude oil inventories declined more than anticipated. The July crude contract rose $2.62 to US$60.30 a barrel and the energy sector rose 0.60 per cent. Meanwhile, August gold gained $1 to US$1,189.80 an ounce.
10% Plan To Max Out TFSAs
Ten percent of Canadians surveyed in a new poll say they typically contribute the maximum amount to their TFSA and will now invest $10,000. The poll done for CIBC found an additional 17% said they will try to increase their contributions above $5,500. The federal government increased the annual contribution limit to $10,000 as part of the budget this year. The increase in the TFSA contribution limits was promised by the Tories in the last election. As part of the increase, however, the limit will no longer increase with inflation. The poll also found that roughly 34% of respondents said they either didn’t have the money to take advantage of the new $10,000 limit or had other investment plans. Breaking the figure down, 18% of those surveyed said they would probably contribute less than the old limit of $5,500, while 12% said they would not have enough savings this year to make a contribution. Four% said they would contribute to other saving plans.
Twenty percent of those responding did not have a TFSA account and had no plans to open one, while 7% said they were now looking into opening one. Another 10% said they didn’t know, while 2% were categorized as other. The online survey was conducted between April 30 and May 4, less two weeks after the federal budget announcement. It included 3,011 Canadian adults who are Angus Reid Forum panelists.
Market Update as of May 29 2015
The TSX closed at 15034, down -167 points or -1.10% over the past week. YTD the TSX is up 1.90%.
The DOW closed at 18011, down -221 points or -1.21% over the past week. YTD the DOW is up 1.00%.
The S&P closed at 2107, down -19 points or -0.89% over the past week. YTD the S&P is up 2.38%.
The Nasdaq closed at 5070, down -19 points or -0.37% over the past week. YTD the Nasdaq is up 7.26%.
Gold closed at 1190, down -14.00 points or -1.16% over the past week. YTD gold is up 1.54%.
Oil closed at 60.42, up 0.70 points or 1.17% over the past week. YTD oil is up 14.67%.
The USD/CAD closed at 1.244265, up 0.0157 points or 1.28% over the past week. YTD the USD/CAD is up 6.03%.
Sources: Bloomberg, CIBC, advisor.ca, Investment Executive