Market week: Stocks retreat as inflation advances

Investors watch for signals of central bank tightening

Rising inflation, reflected in higher commodity prices and labour shortages in the U.S. weighed on the big North American stock gauages last week, resulting in weekly losses. U.S. all-items consumer price index rose at an annual 4.2% rate in April, while the core index (excluding food and energy prices) posted a 3.0% annual rate. The surge in rates had been expected, as the 12-month reading started with a year-ago rate that was largely depressed because of the Covid-19 economic slowdown. Still, monthly readings of 0.8% for the all-items index and 0.9% for the core index exceeded analysts estimates. Key “barometric” commodities have also surged, year to date, with gold ahead 35% and copper up 38%.

As the possibility of tighter monetary policy looms, the main stock market indexes lost ground, with the blue-chip S&P 500 Composite Index down 1.4% on the week, and the Nasdaq Composite Index off 2.3% as the technology majors among others that are sensitive to rate increases sold off as U.S. Treasury bond rates edged up. In Canada, the S&P/TSX Composite Index took a marginal loss, down 0.5% on the week, as energy (crude oil gained 1.1% on the week) and financials helped support the index.

Fund news

* Ninepoint debuts three ETFs. Ninepoint Partners on May 14 launched ETF series on three of its mutual funds:

• Ninepoint Alternative Credit Opportunities Fund (NEO: NACO) invests in a diverse mix of Canadian, U.S., and international fixed-income securities.
• Ninepoint Alternative Health Fund (NEO: NAHF) stocks of companies engaged in nutrition, nutraceuticals, and new forms of medicines and pharmaceutical solutions.
• Ninepoint Energy Fund (NEO: NNRG) invests in companies involved in exploration, development, production and distribution of oil, gas, coal, or uranium and other related activities in the energy and resource sector.

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