Market week: Stocks down after wild week
Yield curve inverts on investors’ flight to safety
Capping a week of intense volatility that saw the major North American stock market indices swing by hundreds of points, traders hit the buy button during Friday’s session, closing the day with some strong gains, but leaving the week overall with losses.
Driven by deep uncertainties about corporate earnings growth, the sustainability of global economic growth (Brexit in Europe, U.S.-China trade tensions everywhere), traders on Wednesday made a flight to safety, buying gold and selling off longer-term government Treasury bonds as traders anticipate lower long-term rates in the future. That raised short-term yields briefly above yields for longer-term issues (a phenomenon known as an “inverted yield curve”) for the first time since the 2008 financial crisis. Historically, this pattern, if sustained, has presaged a recession in 12 to 18 months’ time.
The blue-chip S&P 500 Composite Index lost 1.0% on the week, while the technology-weighted Nasdaq Composite Index retreated 0.8%. Toronto’s benchmark stock index, the S&P/TSX Composite Index, regained some ground on Friday but slid 1.1% on the week overall. Gold also benefitted from the flight to safety, gaining 1.0% on the week, while crude oil edged up 0.7%.
|Index||Aug. 16, 2019 close||Day||Week||Year to date|
|S&P 500 Composite||2,888.69||1.47%||-1.03%||15.23%|
|Oil (WTI) (US$)||$54.87||0.7%||0.68%||20.83%|
* CI First Asset debuts global asset allocation ETF. CI First Asset Exchange Traded Funds announced that CI First Asset Global Asset Allocation ETF (TSX: CGAA) completed its merger with Skylon Growth & Income Trust, and units began trading on Aug. 12. CI First Asset ETFs is a division of CI Investments Inc.
In a release, CI First Asset said the fund’s investment objective is to generate income and long-term capital growth by investing in a combination of equity and fixed-income securities of countries and companies located anywhere in the world.
Rohit Mehta, President of CI First Asset ETFs, said that the fund, actively managed by Signature Global Asset Management, “has been designed to provide investors with income and growth through exposure to multiple asset classes while quickly adapting to changing market conditions.”
* HSBC shuts down Advisor Series mutual funds. HSBC Global Asset Management (Canada) Ltd. announced on Aug. 8 that it will shut down the Advisor Series of all HSBC mutual funds. The Advisor Series are no longer available for purchase and will be terminated on Oct. 25.
HSBC said in a release that outstanding Advisor Series units will be automatically transferred to units of the Investor Series of the same HSBC mutual fund, or into units of the Premium Series if investors meet the minimum account requirements, on or around Oct. 25. Investors may redeem their Advisor Series units or switch their units to another series of the same HSBC Mutual Fund until 23 October 2019.
All other series of the HSBC mutual funds will continue to be offered.
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