Market week: Stocks rally on hopes for lockdown easing

Massive unemployment already discounted

Skyrocketing unemployment numbers for April were already baked into the markets, so Friday’s advances in the big market indices were not unexpected. Statistics Canada reported that the Canadian unemployment rate rose to 13.0% in April as 2 million more jobs were lost in the month on account of the government-mandated lockdowns to combat the spread of new coronavirus. This followed a loss of 1 million jobs in March. Similarly, the U.S. saw a loss of 20.5 million jobs in April (some 18 million of which are classified as “temporary”), pushing the unemployment rate to 14.7% for the month, according to the Bureau of Labor Statistics.

But stock markets had already heavily discounted the heavy economic impact of the pandemic lockdown and are now looking ahead to the gradual lifting of restrictions and re-start of economic activity. Strangely, U.S. and China continued subdued trade negotiations, as representatives agreed to cooperate on economic and health issues – despite threats by U.S. President Donald Trump to cancel an earlier trade pact, accusing the Chinese government of mishandling of the Covid-19 disease, which originated in Wuhan, China.

And with the price of West Texas Intermediate crude oil recovering 25% on the week, Toronto’s S&P/TSX Composite Index gained 2.5% on the week, while New York’s S&P 500 Composite Index advanced 3.6%. The Nasdaq Composite Index rose 6.2% propelled by surging technology issues.

FUND NEWS AND UPDATES

* Franklin Templeton debuts mutual fund mirror of global bond ETF. Franklin Templeton Canada announced on May 4 the launch of its Franklin Global Aggregate Bond Fund, which invests directly in Franklin Liberty Global Aggregate Bond ETF (CAD-Hedged) (TSX: FLGA). The fund holds government, sovereign, and corporate bonds in developed and emerging markets, with a Canadian dollar currency hedge. The fund combines top-down macro views and bottom-up analysis to select holdings, and exploits market inefficiencies in debt markets. The fund is co-managed by Franklin Templeton’s Sonal Desai and John Beck.

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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.