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Monthly Market Developments

Monthly Market Developments


Equities were broadly flat as the banking sector, falling oil prices and the U.S. debt ceiling drama in Congress weighed on performance. The main exception was the technology sector which continued its positive run in 2023. YTD, U.S. Canadian and global equities are still in positive territory. 

U.S. and Canadian bond yields rose on uncertainty over the U.S. debt ceiling negotiations, the demise of another U.S. regional bank, First Republic, and a better-than-expected economic backdrop. 

U.S. chipmaker Nvidia Corp. announced earnings that surpassed estimates by more than 50%, highlighting strong demand for its computer chip technology which is used to power AI applications. 

Japanese equities experienced a resurgence, with local stock indices reaching their highest level in 33 years. This growth is primarily driven by increasing demand from foreign investors. 

• It was a tough month for Canada’s big banks with four of the top five releasing earnings revealing profits were down compared to a year ago, though in absolute terms performance remained resilient. 

Job creation in the U.S. and Canada continued to be strong. The U.S. added approximately 253,000 new jobs and Canada 41,000 jobs. U.S. house prices also posted their largest annual drop in 11 years. 

A number of major central banks coordinated with the Fed in raising interest rates by 25 basis points in May, including the Reserve Bank of Australia, European Central Bank and Bank of England. 

The U.S. inflation picture continues to improve, confirmed by the latest headline CPI falling 1% to 4.9% year-over-year, driven by falling shelter and services prices. This outcome provided the Fed with comfort its rate hiking policy is having the desired effect. The Fed also raised its target interest rate by another 25 basis points to 5-5.25% with Governor Powell hinting further hikes would now probably be on hold. 

Canadian headline inflation came in slightly above last month at 4.4% year-over-year, the first increase in headline consumer inflation since June 2022, as energy prices and elevated mortgage-interest costs overshadowed improvements in food prices. Governor Macklem reconfirmed the Bank of Canada’s rate hiking pause. The bank is watching for signs of a labour slowdown, wage growth to ease, corporate price behaviour to normalize and near-term inflation expectations to fall. 

How does this affect my investments?

The probability of a global economic slowdown is rising due to tightening credit conditions, which should lead to decreased spending and lower prices. It’s important to note this is necessary to tame inflation and is somewhat being engineered by central bank rate hikes. While overall the economic data does point towards a slowdown, the economy seems in better shape than many economists and other market experts expected, which is quite promising. A “soft landing” scenario would be positive for most asset classes. 

Regardless of where we are in the market cycle, it’s important to take a disciplined approach to investing and stay focused on your long-term goals. This strategy helps you keep your emotions out of investing, typically buying high and selling low like many investors do. Ongoing monitoring and reviewing of your portfolio also ensures it remains on track. Diversifying investments reduces risk as well. We are here to support you in achieving your financial goals. Please do not hesitate to contact us. 


The information in this letter is derived from various sources, including CI Global Asset Management, the Wall Street Journal, Bloomberg, Reuters, National Post, Investment Executive, Advisor.ca, Bank of Canada and Statistics Canada as at various dates. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources and reasonable steps have been taken to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.
 Manulife, Manulife & Stylized M Design, Stylized M Design and Manulife Securities are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.
This publication contains opinions of the writer and may not reflect opinions of   Manulife Securities Incorporated and/or Manulife Securities Insurance Inc.]. The information contained herein was obtained from sources believed to be reliable, but no representation, or warranty, express or implied, is made by the writer or Manulife Securities Incorporated . and/or Manulife Securities Insurance Inc.] or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any of the securities. The securities discussed in this publication may not be eligible for sale in some jurisdictions. If you are not a Canadian resident, this report should not have been delivered to you. This publication is not meant to provide legal or account advice. As each situation is different you should consult your own professional Advisors for advice based on your specific circumstances. Manulife Securities Incorporated does not make any representation that the information provided in the 3rd Party articles is accurate and will not accept any responsibility or liability for any  inaccuracies in the information or content of any 3rd party articles. Any opinion or advice expressed in the 3rd party article, including the opinion of a Manulife Securities Advisor, should not be construed as, and may not reflect, the opinion or advice of Manulife Securities. The 3rd party articles are provided for information purposes only and are not meant to provide legal accounting or account advice.
 List of Sources: 
CI Global Asset Management
• Market Pulse: The Week In Review, May 5: file:///C:/Users/User/Downloads/WeeklyUpdateMay5EN.pdf
• Market Pulse: The Week In Review, May 12: file:///C:/Users/User/Downloads/WeeklyUpdateMay12EN.pdf
• Market Pulse: The Week in Review, May 19: file:///C:/Users/User/Downloads/WeeklyUpdateMay19EN.pdf
• Market Pulse: The Week in Review, May 26: file:///C:/Users/User/Downloads/WeeklyUpdateMay26EN-1.pdf
Statistics Canada
• (CPI Portal)
• https://www.bnnbloomberg.ca/u-s-inflation-shows-signs-of-moderating-giving-fed-room-to-pause-1.1918286
• https://www.bnnbloomberg.ca/u-s-federal-reserve-raises-key-rate-but-hints-it-may-pause-amid-bank-turmoil-1.1915141
• https://www.bnnbloomberg.ca/bank-of-canada-governor-says-global-bank-stress-may-alter-rate-path-1.1916044
• https://www.bnnbloomberg.ca/inflation-climbs-to-4-4-in-april-beating-expectations-1.1920768
• https://www.bnnbloomberg.ca/bank-of-canada-and-inflation-what-the-latest-data-could-mean-for-interest-rates-1.1920867
• https://www.bnnbloomberg.ca/scotiabank-reports-q2-profit-down-from-year-ago-raises-quarterly-dividend-1.1924256
• https://www.bnnbloomberg.ca/bmo-reports-q2-profit-down-from-year-ago-raises-quarterly-dividend-1.1924259
• https://www.bnnbloomberg.ca/cibc-reports-1-69b-second-quarter-profit-raises-dividend-1.1924747
• https://www.bnnbloomberg.ca/rbc-reports-q2-profit-down-as-loan-loss-provisions-rise-raises-quarterly-dividend-1.1924754
• https://www.bnnbloomberg.ca/td-bank-group-reports-q2-profit-down-from-year-ago-loan-loss-provisions-up-1.1924771
• https://www.bnnbloomberg.ca/canada-added-41-000-jobs-in-april-crushing-estimates-1.1916393
• https://www.bnnbloomberg.ca/oil-declines-amid-risk-off-mood-as-traders-monitor-u-s-debt-deal-1.1926297
• https://www.bnnbloomberg.ca/oil-drops-as-debt-angst-climbs-and-novak-says-opec-to-stand-pat-1.1924585
• https://www.bnnbloomberg.ca/oil-holds-fourth-weekly-decline-as-concerns-over-demand-linger-1.1920107
• https://www.bnnbloomberg.ca/tsx-recap-index-closes-down-0-85-in-broad-decline-1.1927230
National Post
• https://nationalpost.com/pmn/business-pmn/nvidia-set-to-become-first-us-chipmaker-valued-at-over-1-trillion
• https://nationalpost.com/pmn/business-pmn/nvidia-ceo-jensen-huang-boss-of-trillion-dollar-chip-firm-powering-the-ai-boom
• https://financialpost.com/news/economy/us-inflation-shows-signs-of-moderating-giving-fed-room-to-pause
• https://financialpost.com/real-estate/mortgage-interest-costs-inflation-april
• https://financialpost.com/news/economy/canada-job-gains-beat-expectations
• https://financialpost.com/commodities/energy/oil-price-news-supply
• https://www.msn.com/en-ca/money/topstories/concern-over-us-default-risk-grips-global-markets-as-talks-resume/ar-AA1bwHtp?ocid=msedgdhp&pc=U531&cvid=c2cc0540ef084dbfa2c1b555552426cc&ei=48
• https://www.reuters.com/markets/us/debt-ceiling-standoff-what-happens-if-washington-falls-behind-its-bills-2023-05-18/
Investment Executive
• https://www.investmentexecutive.com/news/industry-news/a-measure-of-inflation-that-is-closely-tracked-by-the-federal-reserve-increased-in-april/
• https://www.advisor.ca/news/economic/federal-reserve-chair-powell-hints-at-a-pause-in-rate-hikes-when-central-bank-meets-next-month/
• https://www.advisor.ca/news/economic/canadas-annual-pace-of-inflation-rose-to-4-4-in-april/
• https://www.advisor.ca/news/economic/statistics-canada-reports-retail-sales-down-1-4-in-march-but-core-sales-up-0-3/
Wall Street Journal
• https://www.wsj.com/articles/fed-set-to-raise-interest-rates-to-16-year-high-and-debate-a-pause-860c8146?mod=markets_major_pos15
• https://www.wsj.com/articles/regional-bank-shares-dive-as-investors-fret-about-contagion-7717c91a?mod=markets_lead_pos1
• https://www.wsj.com/video/jpmorgan-buys-first-republic-bank-in-second-largest-us-bank-failure/E222EF70-FC4E-4275-9010-CAF442CEF99E.html?mod=markets_trending_now_video_pos2
• https://www.wsj.com/articles/strong-labor-market-data-sparks-bond-selloff-45bc2fb5
• https://www.wsj.com/articles/home-prices-fell-in-third-of-the-u-s-during-first-quarter-a7f7f78d?mod=economy_lead_pos1
• https://www.wsj.com/articles/april-jobs-report-unemployment-rate-economy-growth-2023-a500d302?mod=economy_more_pos5
• https://www.wsj.com/articles/home-prices-posted-largest-annual-drop-in-more-than-11-years-in-april-613f2d58?mod=economy_more_pos8
• https://www.wsj.com/articles/biden-mccarthy-try-to-get-debt-ceiling-deal-done-9d943ca9?mod=economy_lead_pos1
• https://www.wsj.com/articles/yellen-says-u-s-wont-have-enough-funds-for-all-payments-by-june-5-without-debt-limit-increase-6f521f2?mod=economy_lead_story
• https://www.wsj.com/articles/debt-ceiling-deal-faces-vote-in-house-310d6d5e?mod=hp_lead_pos1
• https://www.wsj.com/articles/global-stocks-markets-dow-news-05-30-2023-cc34f5b3?mod=markets_lead_pos1
• https://www.wsj.com/articles/global-stocks-markets-dow-news-05-31-2023-91f8ac0c
• USD to CAD: USD to CAD Exchange Rate | Latest News and Forecasts for Canadian Dollar - WSJ
• Oil Prices: CL.1.US | Crude Oil WTI (NYM $/bbl) Front Month Futures Prices and News - WSJ
• MCCI EAFE Index: https://www.wsj.com/market-data/quotes/index/XX/MSCI%20GLOBAL/990300/advanced-chart
• S&P 500 Index: https://www.wsj.com/market-data/quotes/index/US/S&P%20US/SPX?mod=md_home_overview_quote
• TSX Composite Index: https://www.wsj.com/market-data/quotes/index/CA/GSPTSE
• Dow Jones: DJIA.US | Dow Jones Industrial Average Stock Prices and Charts - WSJ
• Market Data (wsj.com)
Markets Insider
• https://markets.businessinsider.com/news/stocks/inside-nvidia-s-stellar-q2-forecast-diverse-product-ramps-and-strategic-supply-chain-maneuvers-analyst-says-1032365876
Linkedin news
• https://www.linkedin.com/news/story/inflation-rises-to-44-in-april-5640604/
Daily Mail
• https://www.dailymail.co.uk/news/article-12040477/First-Republics-collapse-continues-cause-shockwaves-banking-industry.html
• https://www.dailymail.co.uk/news/article-12050855/US-hiring-accelerated-April-employers-added-253-000-new-jobs.html
• https://www.dailymail.co.uk/news/article-12132509/Biden-House-Republicans-reach-agreement-raise-debt-ceiling.html
• https://www.dailymail.co.uk/news/article-12136093/A-breakdown-Biden-McCarthys-deal-raise-debt-limit-35-trillion.html