Market week: Slow-growth China rattles markets

Indices remain flat on the week

Concerns about a slowdown in China’s economy weighed on the S&P/TSX Composite Index this past week, as energy, consumer discretionary, and materials stocks retreated on Friday, leading to a marginal 0.2% loss on the week for the benchmark index. Energy stocks, a major component of the S&P/TSX Composite, retreated as the S&P/TSX Capped Energy Index dropped 2% on the week tracking the 2.1% slide in the price of crude oil. Meanwhile, gold edged back 0.4%.

In the U.S., blue-chip market bellwethers Boeing and Johnson & Johnson led the major indices to losses in Friday’s session, and put a damper on weekly performance. Investors sold off shares of Boeing after reports surfaced that the company had misled the U.S. Federal Aviation Administration about the safety of its 737 Max passenger jetliner. In addition, shares of Johnson & Johnson slid after the company announced a recall of a “single lot” of its baby powder after tests showed traces of asbestos.

China reported that its GDP grew at a 6% rate in the third quarter, down from 6.2% in the previous three months as business investment slowed. Continuing U.S.-China trade tensions are clearly taking a toll on the Chinese economy, but are also affecting economic growth globally.

And despite the media hullaballoo about a possible Brexit agreement between the U.K. and the European Union, the deal will have to be voted on by the British Parliament on Saturday, and the outcome is far from certain, with Parliament having rejected all previous attempts at an agreement.

Still, the S&P 500 Composite Index remained ahead 0.5% on the week while the Nasdaq Composite Index was up 0.4%. Hopes for strong third-quarter earnings and the potential for another rate cut by the U.S. Federal Reserve Board in two weeks’ time are about all that’s keeping sentiment from souring completely.

FUND NEWS

* National Bank launches go-anywhere fixed income ETF. National Bank Investments Inc. debuted its new Unconstrained Fixed Income ETF (TSX: NUBF), which began trading on Friday. The fund invests, directly or indirectly, in one or many mutual funds or through the use of derivatives, in a diversified portfolio mainly composed of fixed-income securities of issuers located throughout the world with various maturities and credit ratings.

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