|  | | | | | Your weekly commentary – For the week ended November 3 | | Global equity markets ended higher over the week ended November 3. Investors turned to risk assets on hopes the U.S. Federal Reserve Board ("Fed") might be close to ending its interest rate hikes. The S&P/TSX Composite Index advanced, led by the Information Technology sector. U.S. equities also increased. Yields on 10-year government bonds in Canada and the U.S. declined. Oil and gold prices fell over the week. | Canada's economy faces pressure- Canada's economy continued to show signs of weakness in August, with gross domestic product largely unchanged (0.0%).
- This marked the second straight month of no growth in Canada's economy, with Statistics Canada expecting the same in September.
- Tight financial conditions again weighed on demand over the month, hurting the manufacturing and retail trade industries.
- Early data shows the Canadian economy may have contracted in the third quarter. If that is accurate, it would push the Canadian economy into a technical recession after shrinking in the second quarter.
| North American labour markets cool- The Canadian economy added 17,500 jobs in October, down from the 63,800 jobs added in the previous month. It was also below economists' expectations. The growth in average hourly wages softened in October to 5.0% from 5.3% in September.
- Canada's jobless rate ticked higher to 5.7% in October, its highest level since January 2022.
- In the U.S., the economy added 150,000 jobs, slowing considerably from the 297,000 jobs added in the previous month. The labour force participation rate edged lower to 62.7%.
- The U.S. unemployment rate rose to 3.9% in October.
- Labour markets in both countries are showing signs of moderating, which could keep a lid on any future rate hikes from their central banks. Government bond yields on both sides of the border fell considerably on the news.
| The Fed stays at 5.25%–5.50%- The Fed held the target range of its federal funds rate steady at 5.25%–5.50%, keeping it at its highest level since 2001.
- The Fed expressed its intent to monitor the current level of interest rates on inflation, the labour market and the U.S. economy, which is described as strong.
- The U.S. central bank believes the recent run-up in Treasury yields could tighten financial and credit conditions, which could help quell inflationary pressures and slow the U.S. economy.
- The Fed did not rule out another rate hike, believing inflation remains a risk, but would like to ensure it does not overshoot on its policy and send the economy into a deep recession.
- The Fed wasn't the only central bank to meet over the week. The Bank of England elected to hold its key interest rate steady at 5.25%.
| China's manufacturing activity shrinks- China's manufacturing sector unexpectedly contracted in October, suggesting the world's second-largest economy remains fragile amid muted demand in response to tight financial conditions.
- The NBS Manufacturing Purchasing Managers Index fell to 49.5 in October from 50.2 in the previous month.
- The manufacturing sector was again brought down by a drop in new orders and employment. Output ticked higher in October but at a slower pace compared to September.
- Conversely, the services sector expanded in October, but the pace of growth moderated from September. Overall, business activity expanded, albeit at a muted pace.
| | | | Equity markets | Level | YTD | 1 Yr | | S&P/TSX Composite Index C$ | 19,824.85 | 2.27% | 3.03% | | MSCI USA Index US$ | 4,145.42 | 13.88% | 17.28% | | MSCI EAFE Index US$ | 2,021.06 | 4.48% | 17.35% | | MSCI Emerging Markets Index US$ | 948.26 | -0.85% | 10.15% | | MSCI Europe Index US$ | 1,824.41 | 5.36% | 19.38% | | MSCI AC Asia Pacific Index US$ | 156.70 | 0.62% | 13.71% | | Fixed income market | Level | YTD | 1 Yr | | FTSE Canada Universe Bond Index C$ | 1,063.26 | 1.15% | 3.09% | | FTSE World Broad Investment Grade Bond Index US$ | 201.07 | -0.57% | 4.59% | | Currency | Level | YTD | 1 Yr | | CAD/USD | 0.7322 | -1.36% | 0.04% | | Commodities | Level | YTD | 1 Yr | | West Texas Intermediate (US$/bbl) | 80.51 | 0.31% | -8.69% | | Gold (US$/oz) | 1,992.65 | 9.25% | 22.29% | | Silver (US$/oz) | 23.21 | -3.09% | 19.22% |
| | Market performance – as at November 3, 2023 | | | |
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