Market week: Stocks lose ground on Trump tariffs

U.S.-China trade war overshadows job gains

The major North American stock indices noticeably lost ground on the week, as U.S. President Donald Trump announced an additional $300 billion in tariffs on Chinese goods. The news overshadowed healthy job gains in July, rising consumer sentiment, and growing new orders for manufactured goods. In addition, investors digested the Federal Reserve Board’s 25 basis point interest rate cut, which Fed Chairman Jerome Powell called a “mid-cycle adjustment” as opposed to an extended program of rate cuts.

The U.S. economy added 164,000 new jobs in July, as the unemployment rate remained at 3.7%. Average hourly earnings, meanwhile, grew at a 0.3% month-over-month pace, even as hours worked slipped, suggesting that employers are cutting back in the face of weaker consumer demand. And that’s what has investors most concerned about the reason for the Fed’s rate cut.

The S&P 500 Composite Index lost 3.1% on the week, while posting a marginal 0.4% gain for the month in July. The Nasdaq Composite Index dropped 3.9% on the week, but managed to eke out a 1.3% advance for July on the back of gains among some of the big tech names.

Toronto’s benchmark S&P/TSX Composite Index slid in sympathy with the U.S. gauges, but didn’t lose quite as much, falling 1.6% on the week, as investors pulled back on energy stocks, driven by a 1.7% retreat in crude oil on the week, and a decline in financials. The S&P/TSX Composite broke even on the month.

Index	Aug. 2, 2019, close	Day	Week	Year to Date	July 31, 2019, close	July 2019
S&P/TSX Composite	16,271.66	-0.6%	-1.57%	13.61%	16,377.04	-0.03%
S&P 500 Composite	2,932.05	-0.7%	-3.10%	16.96%	2,953.56	0.41%
Nasdaq Composite	8,004.07	-1.3%	-3.92%	20.63%	8,111.12	1.31%
Gold (US$)	$1,453.10	1.5%	2.12%	13.55%	$1,420.90	0.50%
Oil (WTI) (US$)	$55.20	2.3%	-1.71%	21.56%	$53.95	-7.06%

Monitor the main stock and commodity indices daily with the Fund Library’s interactive Markets Page.

FUND NEWS

* CI launches high interest savings mutual fund. CI Investments announced on July 31 the launch of CI High Interest Savings Fund, designed to maximize monthly income for unitholders while preserving capital and liquidity. The fund will invest in units of CI First Asset High Interest Savings ETF (TSX: CSAV), which debuted on June 18 and invests primarily in high interest deposit accounts. The funds have an identical mandate and investment objective.

* BMO to shutter three ETFs. BMO Asset Management Inc. announced on July 31 plans to terminate its BMO Global Banks Hedged to CAD Index ETF (TSX: BANK), BMO Global Insurance Hedged to CAD Index ETF (TSX: INSR), and BMO Shiller Select US Index ETF (TSX: ZEUS) on or about November 1. The funds will be de-listed on Oct. 29.

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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.