|  | | | | | Your weekly commentary – For the week ended December 1 | | Global equity markets were flat over the week ended December 1. After pushing markets higher over November, investors took a break to analyze current economic results and the potential actions of central banks. The S&P/TSX Composite Index ticked higher, led by the Health Care sector. U.S. equities also edged higher over the week. Yields on 10-year government bonds in Canada and the U.S. declined. Oil prices finished lower, while the price of gold increased. | Canada's GDP struggles for growth in Q3- In the third quarter of 2023, Canada's gross domestic product ("GDP") shrank by 1.1%, annualized.
- The third quarter saw muted consumer spending as tight financial conditions weighed on Canadian households. Exports also fell considerably, dragging down overall growth. There was a significant drop in shipments of energy products over the quarter.
- While the economy fell in the third quarter, Statistics Canada revised GDP growth for the second quarter higher to 1.4%.
- Canada's labour market remains a source of strength for the Canadian economy despite moderating in recent months. In November, the Canadian economy added 24,900 jobs. Still, the unemployment rate rose to 5.8%, its highest level since the beginning of 2022.
| Inflationary pressures ease in the U.S.- The U.S. Federal Reserve Board's ("Fed") preferred inflation gauge, the personal consumption expenditure price index ("PCE"), moderated in October, providing more signs inflationary pressures are easing in the world's largest economy.
- The PCE fell to 3.0% in October from 3.4% in the previous month, its lowest level since March 2021. Economists were expecting a 3.1% rate.
- Personal spending in the U.S. rose by 0.2% in October, benefiting from higher spending for travel and housing. Despite the increase, it was a marked slowdown from the 0.7% increase in September and the lowest pace of growth since May.
- The slowdown in the PCE and spending suggests U.S. economic activity is moderating, which could have the Fed holding steady at its final announcement of 2023 on December 13.
| European inflation moves closer to target- A flash estimate showed European inflation edging lower towards the European Central Bank's ("ECB") 2% target. European inflation ticked lower to 2.4% in November from 2.9% in October.
- Energy costs continued to drop at a sharp pace in November, while price growth slowed for food and non-industrial energy goods.
- European inflation has come down a long way from the record high of 10.7% reached in October 2022.
- The ECB seems likely to hold its policy interest rate steady at 4.50% at its December meeting.
- While the ECB has been steadfast in keeping rates higher for longer, recent inflation and economic growth data could have the central bank soon considering reducing rates.
| Global manufacturing sector activity remains muted- Manufacturing activity across the globe continues to be hindered by weak demand amid tight financial conditions.
- In North America, the Canadian and U.S. manufacturing sectors contracted in November, hindered by weaker new orders. Canada's manufacturing sector contracted for a seventh straight month.
- China's manufacturing sector turned expansionary over the month, benefiting from a rise in new orders. Still, activity remains relatively muted in this critical sector of China's economy.
- Manufacturing activity in Europe contracted for a 17th straight month in November, still hindered by weak demand. Weakness was particularly notable in Germany, whose economy is largely driven by its manufacturing capabilities.
| | | | Equity markets | Level | YTD | 1 Yr | | S&P/TSX Composite Index C$ | 20,452.87 | 5.51% | -0.35% | | MSCI USA Index US$ | 4,381.11 | 20.35% | 13.17% | | MSCI EAFE Index US$ | 2,130.49 | 9.60% | 6.74% | | MSCI Emerging Markets Index US$ | 982.14 | 2.69% | 0.39% | | MSCI Europe Index US$ | 1,930.40 | 11.48% | 8.50% | | MSCI AC Asia Pacific Index US$ | 161.77 | 3.87% | 1.57% | | Fixed income market | Level | YTD | 1 Yr | | FTSE Canada Universe Bond Index C$ | 1,094.85 | 4.16% | 1.31% | | FTSE World Broad Investment Grade Bond Index US$ | 207.44 | 2.58% | 0.68% | | Currency | Level | YTD | 1 Yr | | CAD/USD | 0.7409 | -0.05% | -0.95% | | Commodities | Level | YTD | 1 Yr | | West Texas Intermediate (US$/bbl) | 74.07 | -7.71% | -8.80% | | Gold (US$/oz) | 2,072.22 | 13.61% | 14.93% | | Silver (US$/oz) | 25.49 | 6.39% | 12.00% |
| | Market performance – as at December 1, 2023 | | | | | |
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This commentary represents Canada Life Investment Management Ltd.'s views at the date of publication, which are subject to change without notice. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This commentary is intended as a general source of information and is not intended to be a solicitation to buy or sell specific investments, nor tax or legal advice. Before making any investment decision, prospective investors should carefully review the relevant offering documents and seek input from their advisor. You may not reproduce, distribute, or otherwise use any of this article without the prior written consent of Canada Life Investment Management Ltd. Privacy, legal, copyright and trademark information
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