“Every accomplishment starts with a decision to try” – Anonymous
New Year, Same Rally
The Toronto Stock Exchange’s S&P/TSX composite index dropped 63.50 points (0.39 per cent) on Friday to finish at 16,349.44. Resources weighed on the TSX on Friday, with oil, gold, copper and other metals pulling back on the day.
However, the TSX enjoyed a gain of 0.9 per cent on the week as the extended market rally continued into 2018.
Statistics Canada announced the December jobs numbers, with 79,000 new jobs being added. One caveat, however, is that most of them were seasonal, part-time positions. However, Canada’s unemployment rate of 5.9% in November was a full percentage point lower than in November 2016.
Retail sales data, housing starts, and consumer confidence levels were all higher year-over-year as well.
U.S. Crude Oil dropped by 42 cents USD per barrel to finish the week at $61.59 USD.
Gold dropped by $1.30 USD per ounce on Friday, and finished at $1,320.30 per ounce.
The Loonie rose by 56 basis points on Friday to finish at 80.61 cents to the Greenback, a rise of 0.6989 per cent.
U.S. Markets Hit More Record Highs
The S&P 500 rose 19.08 points (0.70 per cent) on Friday to close out the week at 2,743.07.
The Dow Jones Industrial Average (DJIA) rose above 25,000 for the first time ever on Thursday, and jumped by 220.74 points (0.88 per cent) on Friday to finish at 25,295.87.
NASDAQ also had a good day on Friday, with a gain of 58.64 points (0.83 per cent).
Some encouraging global economic data helped to propel markets upward. US unemployment figures for November – like Canadian unemployment – were lower than a year prior.
2017 Market Recap
It was, in some ways, a strange year for the Canadian investor. Early in the year, Canadian markets were relatively flat, while south of the border, U.S. markets were (and still are) very hot. Overseas markets advanced. However, as the Canadian dollar appreciated relative to the Greenback, U.S. and many overseas gains were mitigated.
As the year progressed, the Bank of Canada raised rates twice, and the Fed also raised rates. The BoC raising rates led to a dampening of fixed income returns. Luckily, the TSX rebounded late and was able to post a decent, if unremarkable, 6% increase on the year.
Most major international indexes posted double-digit returns; in fact, even factoring the appreciating Loonie, global markets outpaced Canadian markets.
So, what is the lesson here? In our opinion, this information reinforces the benefit of sound diversification, not only between equities and fixed income, but also regional diversification. Canadian investors have the reputation of being the most biased toward domestic markets, and, at least in 2017, the Canadian investor who invested heavily in Canada at the expense of other regions certainly missed out on some significant gains.
If you have questions about your asset allocation or would like to come in for a review of your portfolio, please let us know!
2017 Market Recap: By The Numbers
The TSX finished at 16,209, up 6.0% for 2017
The DOW finished at 24,719, up 25.1% for 2017, or 17.0% in $CDN
The S&P 500 finished at 2,674, up 19.4% for 2017, or 11.7% in $CDN
The NASDAQ finished at 6,903, up 28.2% for 2017, or 19.9% in $CDN
Gold finished at $1,303 USD per ounce, up 13.1% for 2017
Oil finished at $60.42 USD per barrel, up 12.5% for 2017
The USD/CDN finished at 0.7955, up 6.9% for 2017
The CDN/EUR finished at 1.5089, up 6.8% for 2017
The MSCI World finished at 2,103, up 20.1% for 2017, or 12.3% in $CDN
The MSCI EAFE finished at 2,051, up 21.8% for 2017, or 13.9% in $CDN
The MSCI EM finished at 1,158, up 34.3% for 2017, or 25.7% in $CDN
The FTSE 100 finished at 7,688, up 7.6% for 2017, or 10.3% in $CDN
The DAX finished at 12,918, up 12.8% for 2017, or 20.4% in $CDN
The Nikkei finished at 22,765, up 18.9% for 2017, or 15.3% in $CDN
Sources: Globe Advisor, TD, Yahoo! Finance