Market week: Stock markets in retreat

Market week: Stock markets in retreat

Covid variant, inflation among investor concerns


A shortened week for U.S. stock markets combined with concerns about a new Covid variant originating in South Africa and still-high inflation served to sink stock markets on the week. In the U.S., the personal consumption expenditure index showed consumer spending increased at an annual 5.0% rate in October, up from 4.4% in September, propelled by brisk demand for both goods and services. Even the core index, which excludes food and energy prices, showed a year-over-year increase of 4.1%. The persistence of inflation has investors on edge about the timing of the U.S. Federal Reserve Board’s plans, not only to taper its quantitative easing program but also to start raising its policy rates, which had been widely expected for the middle of next year, but may now come sooner. In addition, President Joe Biden has confirmed current Fed Chair Jerome Powell for another term, and Powell is perceived, as being more hawkish, although there’s no evidence for this.

The S&P/TSX Composite Index fell 2.0% on the week led by losses information technology (-5.0%), consumer staples (-4.7%), and materials (-3.8%). All TSX sectors pulled back on the week. Energy, however, remained relatively flat, retreating 0.4%, despite a weekly 10.4% slide in the price of crude oil. Even gold slipped 3.0% on the week, impacting materials.

The U.S. blue-chip benchmark S&P 500 Composite Index posted a 2.2% loss on the week, led down by losses in consumer discretionary, telecom services, and information technology sectors, which all lost more than 3.0%. The technology-weighted Nasdaq Composite Index fell 3.5% on the week, on weakness in the IT majors.

Fund news

* Horizons launches metaverse ETF. Horizons ETFs Management on Nov. 25 debuted its Horizons Global Metaverse Index ETF (TSX: MTAV), which were conditionally approved for listing by the TSX and were slated to begin trading on Nov. 29.

The ETF tracks the Solactive Global Metaverse Index of global, publicly-listed companies that potentially stand to benefit from the adoption and usage of technologies expected to grow and support the functioning of the metaverse. These include companies in such sectors as augmented/virtual reality, creator economy, digital infrastructure, digital marketplace, gaming, and digital payments.

* Brompton rebuilds preferred income fund. Brompton Funds Ltd. announced on Nov. 26 that it has completed the conversion of its Flaherty & Crumrine Investment Grade Preferred Income Fund (TSX: FFI.UN) from a closed-end fund to an exchange-traded fund. The fund name has changed to Brompton Flaherty & Crumrine Enhanced Investment Grade Preferred ETF (TSX: BEPR).

* Brompton renames and refocuses real assets fund with ESG filter. Brompton Funds announced on Nov. 22 that it has changed the name of Brompton Global Real Assets Dividend ETF to Brompton Sustainable Real Assets Dividend ETF (TSX: BREA). Ind addition the investment objectives of the fund have been amended to integrate ESG considerations into the investment process.

BREA invests in a diversified actively-managed portfolio consisting of securities of global real asset companies, including real estate, utilities, and infrastructure sectors. Real asset companies may be involved in traditional real asset business activities such as ownership and operation of power plants, pipelines, transportation infrastructure, telecommunications networks, commodities-related businesses, or real estate.

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