| Your weekly commentary – For the week ended March 24 |
| Global equity markets finished mostly flat as investors weighed a relatively lower rate hike by the U.S. Federal Reserve Board ("Fed") against concerns about the global banking system, which could push the global economy into a recession. The S&P/TSX Composite Index ticked higher, led by the Information Technology sector. In the U.S., the S&P 500 Index finished in positive territory. Oil and gold prices ended largely unchanged. Yields on 10-year government bonds in Canada and the U.S. declined. |
UBS acquires Credit Suisse- UBS Group AG acquired Credit Suisse Group AG following significant financial issues at Credit Suisse, which raised fears of contagion through the global banking sector.
- The government of Switzerland and Swiss National Bank supported the acquisition.
- Credit Suisse came under pressure after noting it had material weaknesses in its financial reporting. Its largest shareholder refused to inject more capital into the firm, dampening the company's shares.
- Three regional banks in the U.S. also faced trouble. Silicon Valley Bank fell into receivership, while First Republic Bank received US$30 billion from a group of U.S. banks to help it stay afloat and restore customer confidence in the firm.
- The Fed and Bank of Canada ("BoC") are among several central banks that have taken steps to improve liquidity through more frequent U.S. dollar swap arrangements.
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Canada's inflation rate eases further- Canada's inflation rate eased to 5.2% in February from 5.9% in January.
- The rate dropped below the 5.4% rate economists expected due to lower energy prices compared to the same month last year when prices were relatively elevated.
- Shelter prices slowed over the month.
- The result likely reinforces the BoC's decision to pause interest rate hikes. However, in its meeting notes released last week, the BoC acknowledged inflation has been stickier than expected, worrying officials.
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Canadian retail sales bounces back- Retail sales in Canada grew 1.4% in January, following two straight months of no growth (0.0%).
- It was the highest level of monthly retail sales growth since May 2022, indicating the Canadian consumer remains relatively resilient to tighter financial conditions.
- The increase came from a rise in sales at gasoline stations, clothing retailers and new car dealerships.
- Despite the strong reading in January, Statistics Canada estimated retail sales may have fallen by 0.6% in February.
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Another 25 bps rate hike from the Fed- As widely expected, the Fed raised the target range of its federal funds rate by 25 basis points to 4.75%-5.00%.
- The rate reached the highest level since 2007 as the Fed remains focused on bringing inflation back to its 2% target.
- The Fed noted rates might go higher this year. Chair Jerome Powell indicated a rate cut this year is unlikely if the economy progresses as expected.
- Concerning banking sector challenges, the Fed reiterated its stance that the banking system remains strong, but credit conditions could tighten, which may weigh on economic activity.
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| Equity markets | Level | YTD | 1 Yr | | S&P/TSX Composite Index C$ | 19,501.48 | 0.60% | -11.38% | | S&P 500 Index US$ | 3,970.99 | 3.42% | -12.59% | | Dow Jones Industrial Average US$ | 32,237.53 | -2.74% | -7.53% | | MSCI EAFE Index US$ | 2,017.13 | 3.77% | -6.59% | | MSCI Emerging Markets Index US$ | 972.17 | 1.65% | -13.59% | | MSCI Europe Index US$ | 1,812.70 | 4.68% | -4.28% | | MSCI AC Asia Pacific Index US$ | 159.71 | 2.55% | -10.94% | | Fixed income market | Level | YTD | 1 Yr | | FTSE Canada Universe Bond Index C$ | 1,096.40 | 4.30% | 0.40% | | FTSE World Broad Investment Grade Bond Index US$ | 209.62 | 3.66% | -7.02% | | Currency | Level | YTD | 1 Yr | | CAD/USD | 0.7280 | -1.38% | -9.22% | | Commodities | Level | YTD | 1 Yr | | West Texas Intermediate (US$/bbl) | 69.26 | -13.71% | -39.19% | | Gold (US$/oz) | 1,978.21 | 8.45% | 1.02% |
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| Market performance – as at March 24, 2023 |
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