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North American stock indexes posted solid gains on the week, continuing the rally that saw some recovery of losses suffered through January. The driving force for the reversal in sentiment was the creation of 467,000 jobs in the U.S. through January, as the unemployment rate ticked up just a notch to 4.0% from 3.9% in December. In Canada, the labour market lost 200,000 jobs in January, mostly in service industries where government lockdowns and mandates forced the closure of tens of thousands of businesses, throwing hundreds of thousands of employees out of work. With restrictions being lifted, analysts believe that the job loss was temporary and expect a recovery in the labour market, and expect the unemployment rate to tick back down from January’s 6.5%.
Toronto’s S&P/TSX Composite Index gained 2.6% on the week, as energy, banks, financials, healthcare, and consumer staples sectors gained ground. Crude oil posted a weekly gain of 1.8% as traders fretted over the simmering tension between NATO and Russia over Russia’s military buildup along the Ukraine border. A deep freeze in Texas disrupted some production in the Permian oil fields, adding to short-term anxieties along with doubts about OPEC’s ability to meet increased production quotas.
The S&P/TSX Composite’s weighting to energy and financials offset losses in technology, consumer discretionary, communication services, and so-called “meme” stocks, which held back the Nasdaq Composite Index (up 2.5%) and the S&P 500 Composite Index (up 1.6% on the week). Gold remained rangebound, gaining 1.2% on the week, as traders continue to avoid any decisive shift, just yet, to gold as an inflation or turmoil hedge.
* Fundata A+ Awards for 2021 announced. Financial data provider Fundata Canada announced the winners of the 2021 A+ Awards on Jan. 26. The Award is given annually to investment funds and managers who have shown consistent, outstanding, risk-adjusted performance incorporating up to 10 years of history. Winners will be posted on the Fundata A+ Awards website.
* Evolve debuts bank ETF. Evolve Funds Group Inc.’s Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund (TSX: BANK) began trading on Feb. 3. The ETF aims for enhanced yield through exposure to the 10 largest Canadian banks and insurance companies, and is rebalanced quarterly on an equally-weighted basis.
The fund aims for up to a 1.25 times multiple of the performance of the Solactive Canadian Core Financials Equal Weight Index, by investing primarily in the equity constituents of the index, while writing covered call options on up to 33% of the portfolio securities in the portfolio.
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