Market week: TSX cushioned by materials

Market week: TSX cushioned by materials

Fed, trade, geopolitical tensions sink U.S. indices

Toronto's S&P/TSX Composite Index broke even on the week, cushioned by a rally in the materials sector. But the main U.S. stock indices lost ground on the week as investors digested mixed earnings reports and the implications of an expected cut in the U.S. Federal Reserve Board’s policy interest rate at the meeting of the Federal Open Market Committee on July 30-31. While Microsoft Corp. (NSD: MSFT) exceeded consensus earnings expectations, with a net profit of US$36.8 billion for fiscal 2019, a gain of 21.6% over 2018 earnings. On the other hand, while quarterly bank earnings came in above street estimates, investors seemed to be anticipating softer earnings over the coming quarters if the Fed cuts rates as anticipated.

In addition, U.S.-China trade issues remain unresolved, even though U.S. trade representatives Robert Lighthizer and Steven Mnuchin discussed trade frictions with their Chinese counterparts on Thursday. And tensions also increased in the Middle East, as Iran on Friday said it seized two British-flagged ships in the Strait of Hormuz, while the U.S. Navy is reported to have destroyed an Iranian drone threatening the U.S.S. Boxer, an amphibious assault ship.

The S&P 500 Composite Index edged down 1.2% on the week as a result, while the technology-weighted Nasdaq Composite Index also slipped 1.2%.

In Canada, the all-items consumer price index stepped back to an annual 2.0% rate, down from 2.4% in May, as falling gasoline prices kept CPI in check. The Bank of Canada’s three core measures also remained hovering around the 2.0% level, keeping inflation concerns sidelined as a driving factor for the Bank of Canada’s interest rate policy in coming months.

A 2.4% weekly slide in the price of crude oil wasn’t enough to sink Toronto’s benchmark S&P/TSX Composite Index, which broke even on the week. The slide was cushioned by the S&P/TSX Capped Materials Index, which posted a 5.5% weekly advance, led by copper miners HudBay Minerals Inc. (TSX: HBM) and First Quantum Minerals Ltd. (TSX: FM).


Index July 11, 2019 close Day Week Year to date  
S&P/TSX Composite      16,485.94 -0.1% -0.01% 15.10%  
S&P 500 Composite        2,976,61 -0.6% -1.23% 18.74%  
Nasdaq Composite        8,146.49 -0.7% -1.18% 22.78%  
Gold (US$)      $1,426.60 -0.1% 0.65% 11.48%  
Oil (WTI) (US$)           $56.14 1.5% -2.38% 23.63%  

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


* Picton Mahoney steps into ETF space. Mutual fund manager Picton Mahoney Asset Management debuted its new exchange-traded fund, Picton Mahoney Fortified Income Alternative Fund (TSX: PFIA), which is designed to provide investors with income and capital appreciation while mitigating capital loss through shorting and other hedging strategies. The company also announced that exchange-traded units for their entire Fortified Alternative mutual fund family began trading on the TSX on July 16.

Picton Mahoney Fortified Active Extension Alternative Fund (TSX: PFAE)
Picton Mahoney Fortified Market Neutral Alternative Fund (TSX: PFMN)
Picton Mahoney Fortified Multi-Strategy Alternative Fund (TSX: PFMS)

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