“You Can Go to Jail for “Ideological Deviation” ” -Havana Taxi Driver, who prefers to remain anonymous
TSX, Loonie Rebound on Oil Demand & Potential European Easing
The S&P/TSX Composite finished the week up for the first time in 2016, settling at 12,389.58 on the closing bell Friday afternoon, buoyed by a rise in oil back above the $30USD mark. A heavy winter storm on the east coast of Canada and the US sparked demand in oil, contributing to the rebound. South of the border, the Dow Jones Industrial Average, the New York Stock Exchange, the NASDAQ, and the S&P500 all finished the week up. It was a different story in Asia, however, with both the Hang Seng Index and the Nikkei 225 finishing down this week. Europe was mixed, with the FTSE up on the week where the DAX slumped.
Oil finished the week at $32.22USD, up 9% – and 15% in the last 2 days – to recover some of the supply-driven selloff of the past few weeks. In addition to the demand driven by the west coast’s winter storm, prices were also driven up by investors covering short positions. This may be a short bump, however, as worldwide production of oil remains about 1 million barrels per day higher than demand requires.
Oil’s rebound has helped to push the Loonie back up above 70 cents, finishing at 70.79 cents per US Dollar. Speculation is building that the Bank of Canada could cut rates again, which could push the Loonie down even more compared to the U.S. Dollar. However, where last week saw many analysts predicting another rate cut by the Canadian Central Bank, surprising news this week saw a different possibility open up. The decrease in the loonie has been felt at the registers, and inflation unexpectedly came in above the Central Bank’s target. The Bank may have no choice when they next act on the interest rate but to increase it, in hopes of stemming inflation.
Gold once again continues to be seen as a safe investment, closing out the week at $1,098.20, up on the week about $20 per ounce.
European Central Bank President Mario Draghi hinted on Thursday that The Bank may loosen its monetary policy when it meets in March, further helping the markets to close out the week in the black. This is in contrast to the Federal Reserve Board, which is still considering raising interest rates in the near future. However, the low inflation rate in the US, combined with low oil prices indicate the ability of the market to move onward and upward, according to Paul Springmeyer, portfolio manager at US Bank’s Private Client Reserve in Minneapolis.
General sentiment seems to be slowing steering toward cautious optimism, with many analysts now feeling that the worst is likely behind us. Andrew Brenner, head of international fixed income for National Alliance Capital Markets stated things thusly: “I think we’re a heck of a lot closer to the bottom, and I think it’s a better time to put your foot in the water, but don’t back up the truck yet.” Overall, the tide appears to be ever-so-slowly turning, with investors starting to tip-toe back into the market. The end of the slide shouldn’t be too far off in the distance from today. Value investors looking for high-quality equities at discount prices are sensing that buying opportunities are about to open up.
Market Upate as of January 22 2016
The TSX closed at 12370, up 298 points or 2.47% over the past week. YTD the TSX is down -4.76%.
The DOW closed at 16094, up 106 points or 0.66% over the past week. YTD the DOW is down -7.64%.
The S&P closed at 1907, up 27 points or 1.44% over the past week. YTD the S&P is down -6.70%.
The Nasdaq closed at 4591, up -156 points or 2.30% over the past week. YTD the Nasdaq is down -8.31%.
Gold closed at 1098, up -15.00 points or 0.92% over the past week. YTD gold is up 3.68%.
Oil closed at 31.98, up 2.33 points or 7.86% over the past week. YTD oil is down -13.68%.
The USD/CAD closed at 1.414354, down -0.0384 points or -2.64% over the past week. YTD the USD/CAD is up 2.22%.
The MSCI World closed at 1498, down 51.00 Points or -3.30% over the past week. YTD the MSCI World is down -9.92%.
The Euro Stoxx 50 closed at 3023, up 80.00 points or 2.37% over the past week. YTD the EuroStoxx 50 is down -7.48%.
The FTSE closed at 5900, up 96.00 points or 1.65% over the past week. YTD the FTSE is down -5.48%.
The CAC closed at 4337, up 127.00 points or 3.00% over the past week. YTD the CAC is down -6.48%.
The DAX closed at 9765, up 220.00 points or 2.30% over the past week. YTD the DAX is down -9.10%.
The Nikkei closed at 16959, down 188.00 points or -1.64% over the past week. YTD the Nikkei is down -10.90%.
The Shanghai closed at 2917, up 16.00 points or 0.60% over the past week. YTD the Shanghai is down -17.59%.
Sources: Bloomberg; Investment Executive; advisor.ca,