Market week: Stocks rise on trade hopes

U.S.-China trade talks

Reacting to strong U.S. GDP readings and the potential for a U.S.-China trade deal, the U.S. blue-chip S&P 500 Composite Index closed on Friday above the 2,800 mark for the first time since Nov. 8, advancing 0.4% for the week, while posting a 3.0% gain for February. The S&P 500 is now up 11.8% year to date, and is near to recovering losses sustained during the year-end stock market correction. Likewise, the technology-weighted Nasdaq Composite Index is ahead nearly 1% on the week, having closed February with a 3.4% monthly gain and advancing 14.5% year to date by Friday’s close. Toronto’s benchmark S&P/TSX Composite Index logged a 0.3% gain for the week, and was up nearly 3% in February, with a 12.2% year-to-date advance as of Friday’s close. Crude oil dropped 2.5% on the week, but is still ahead 22.8% year to date.

Traders remained hopeful that U.S.-China trade negotiations will culminate with a deal when President Donald Trump meets with China’s Xi Jinping in the next couple of weeks. Meantime, U.S. trade negotiator Robert Lighthizer announced that a 25% tariff increase on US$200 billion of Chinese goods would not go into effect on March 2 as planned.

A closely-watched gauge of U.S. manufacturing activity fell again in February, raising some concern of a developing slowdown in U.S. economic growth. The Institute for Supply Management’s manufacturing purchasing managers index slipped to 54.2 in February from 56.6 in January. Any reading above 50 indicates growth in the sector, but the index has been dropping steadily since reaching a high of 60.8 last summer.

Still, U.S. gross domestic product grew at a 2.6% annual pace in the fourth quarter of 2018, indicating continuing solid economic growth, despite an environment of rising rates, a partial government shutdown in December, and a steep correction in stock markets in the fourth quarter. For the year, the U.S. economy grew a respectable 2.9%.

Canada’s GDP, on the other hand, stalled in the fourth quarter, growing at a near-invisible 0.4% from the third quarter (a 1.6% annual rate), as the energy sector suffered from a steep drop in crude oil prices. For 2018 overall, Canada’s economy expanded 1.8%.

FUND NEWS

* iA Clarington launches liquid alt and international equity mutual funds. iA Clarington Investments on March 1 debuted two new mutual funds.

iA Clarington U.S. Equity Opportunities Fund is a long/short, active U.S. equity mandate sub-advised by MacKay Shields LLC, and targets broad exposure in the U.S. equity market.

iA Clarington International Equity Fund Managed by Industrial Alliance Investment Management Inc., the fund invests in industry-leading companies outside of Canada and the U.S., using a growth-at-a-reasonable-price (GARP) investment style.

* Franklin Templeton debuts multi-asset ETF portfolios. Franklin Templeton on Feb. 28 launched of three new mutual fund portfolios providing access to active asset allocation through a combination of active, smart beta, and passive ETFs across multiple asset classes and geographies.

Franklin Conservative Income ETF Portfolio invests primarily in ETFs that hold Canadian, U.S., and international equity and fixed-income securities. It aims for a balance between long-term capital appreciation.

Franklin Core ETF Portfolio provides a balance between long-term capital appreciation and income by investing in ETFs that hold Canadian, U.S., and international equity and fixed-income securities.

Franklin Growth ETF Portfolio aims for long-term capital appreciation with some income through a diversified mix of ETFs that hold Canadian, U.S., and international equity and fixed income securities.

The portfolios will be co-managed by Franklin Templeton veteran managers Ian Riach and Michael Greenberg.

* Horizons launches preferred share ETF. Horizons ETFs Management (Canada) debuted its Horizons Laddered Canadian Preferred Share Index ETF (TSX: HLPR), which began trading on Feb. 27. The ETF tracks the Solactive Laddered Canadian Preferred Share Index (Total Return) of Canadian preferred shares that generally have an adjustable dividend rate.

@FundLibrary – Follow Fund Library on Twitter for daily information and updates.

Disclaimer

© 2019 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

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.