Market week: Stocks retreat amidst summer doldrums

Market week: Stocks retreat amidst summer doldrums

Delta variant, Fed tapering, China lockdowns weigh on sentiment


North America’s main stock indexes logged weekly losses as investors digest rising Delta-variant case counts, fresh Covid lockdown restrictions imposed in China (along with fears of a slowdown in GDP growth), and more confirmation about the U.S. Federal Reserve Board’s position on the timing of and bond-buying (quantitative easing) tapering.

Speculation about the Fed’s tapering plans following the release of the Minutes from the previous meeting powered the U.S. dollar higher, hitting commodity prices and commodity-linked currencies, like the Canadian dollar, hard over the past week. With crude oil down 8.5% over the week, and gold virtually unchanged, the Canadian dollar slid about 2.5% against the greenback, closing the week at US$0.7778.

The dog days of summer are also notoriously volatile for stock markets as moves can be exaggerated on lighter volume as many traders are away from their screens on summer vacation.

As a result the S&P 500 Composite Index slipped 0.6% on the week, while the growth-oriented Nasdaq Composite Index edged back 0.7%. Toronto’s S&P/TSX Composite Index posted a 0.9% weekly loss as energy, materials, and metals and mining all lost ground.

Fund news

* Canadian mutual fund, ETF assets grow to $2 trillion in July. The Investment Funds Institute of Canada (IFIC) on Aug. 19 released its Monthly Investment Fund Statistics for July. The report, which tracks investment fund net sales and net assets for the month, showed mutual fund assets totalled $1.983 trillion at the end of July as assets increased by $33.0 billion, or 1.7%, compared with June. Mutual funds recorded net sales of $8.8 billion for the month. At the same time, ETF assets totalled $313.6 billion at the end of July as assets increased by $6.7 billion, or 2.2%, compared with the previous month, on recorded net sales of $3.0 billion.

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