Market week: Stocks power to big gains in 2019

Geopolitical tensions, soft economic data fray nerves in early 2020

The major North American stock gauges rewarded investors with strong gains in 2019, but started the new year on something of a downbeat, for the most part losing ground overall on the week, as Mideast tensions flared and a key U.S. manufacturing index slumped to its lowest level since 2009.

Stock markets closed the year with significant gains, surging ahead in December and the fourth quarter overall. The S&P/TSX Composite Index climbed 19.1% in 2019, while the S&P 500 Composite Index surged 29% and the Nasdaq Composite Index powered to a 35% gain.

Some of the momentum faded in the first two days of trading in 2020, as investor sentiment soured on the release of the Institute for Supply Management’s manufacturing index for December. With a reading of 47.2% in the month, down from November’s 48.1%, the ISM manufacturing index has declined for five straight months and is at its lowest level since June 2009. Any reading below the 50% threshold indicates contraction in the sector. The sector was weighed down by troubles at two major U.S. manufacturers. Boeing Co. suspended production of its 737 Max jetliner and General Motors Corp. continues to feel the effects of a recent strike. In addition, the U.S.-China trade dispute continues to weigh on manufacturing, despite some progress in the so-called phase one talks.

Investors finished off a short week of trading were unnerved by a U.S. air attack in Baghdad, which killed Qassem Soleimani, the chief of Iran’s Islamic Revolutionary Guard’s Quds Force, following an Iranian-led siege of the U.S. embassy in Baghdad. As is usual with any military action in the Mideast, the price of crude oil jumped as speculators place short-term bets on supply disruptions, gaining 2.0% on the week, while gold gained 2.2% in an apparent “flight to safety” trade following Thursday’s action.

Toronto’s S&P/TSX Composite Index dropped 0.6% on the week, weakening in sympathy with the S&P 500 Composite. Only the tech-heavy Nasdaq Composite continued its uptrend, gaining 0.2% on the week overall.

Index	Jan. 3, 2020, close	Day	Week	Dec. 31, 2019, close	Dec. 2019	Q4 2019	2019
S&P/TSX Composite	17,066.12	-0.2%	-0.59%	17,063.43	0.14%	2.43%	19.13%
S&P 500 Composite	3,234.85	-0.7%	-0.16%	3,230.78	2.86%	8.53%	28.88%
Nasdaq Composite	9,020.77	-0.8%	0.16%	8,972.60	3.54%	12.17%	35.23%
Gold (US$)	$1,551.70	1.9%	2.21%	$1,523.10	3.59%	3.00%	19.02%
Oil (WTI) (US$)	$63.00	3.0%	2.07%	$61.06	10.18%	12.53%	34.46%

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Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.