Fund Library News Wire
| Friday, November 24, 2017
By Mike Keerma
With third-quarter earnings beating expectations and major retailers
getting a boost from the Black Friday sales push, the major North American
equity indices posted weekly gains for the first time in three weeks.
Ebullient retail sales numbers buoyed markets as online U.S. retail giant
Amazon.com Inc. (NASDAQ: AMZN) and bricks-and-mortar retailer
Macy’s Inc. (NYSE: M) led the markets higher, advancing 5.3% and 3.5%, respectively, on the week.
An uptick in the U.S. rate of inflation in October raised market
expectations of a Federal Reserve Board rate hike in December, supported by
a flattening yield curve, with the spread between the 2-year U.S. Treasury
note and the 30-year bond narrowing to 0.60 of a percentage point, its
tightest spread in a decade. The
S&P 500 Composite Index advanced 0.9% on the week, while the
Nasdaq Composite Index
gained 1.6%. Toronto’s benchmark
S&P/TSX Composite Index gained 0.7% on the week, as energy stocks rose on a 4.3% weekly advance in
the price of
Canada’s inflation rate remained tame in October, with a monthly gain of
0.1% over September, an annual 1.4% rate. Energy prices weighed heavily on
the consumer price index in October, but that is likely to reverse when the
November numbers come in. Canada’s inflation rate remains well below the
Bank of Canada’s target 2%, giving the Bank of Canada less reason to
implement a rate hike before next spring.
In the U.S. the headline consumer price index rose at a monthly 0.1% rate
(2% year over year), while the core rate, which strips out food and energy
prices, rose 0.2% in the month (an annual 1.8% rate). With U.S. inflation
persistently below the Fed’s 2% target, some observers see little reason
for the Fed to hike rates in December, despite telegraphing such a move in
earlier comments. However, with a strong labor market, low unemployment,
decent GDP growth, and the potential for a major tax cut by the Trump
Administration, the Fed may well stick to its guns and hike rates again
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