By Scotia Wealth Management - The Zukiwsky Group

sponsored

MARKET WATCH: Feb. 21, 2020

Feb 21, 2020 | 4:41 PM

Big Picture

Coronavirus Concerns Keeping Markets on Edge

Investors remain focused on the spread of the coronavirus and China’s efforts to contain the disease–and its effect on global supply chains. While U.S. and Canadian markets were closed Monday, news about the virus continued to move markets abroad. On Tuesday global equity markets slid after Apple Inc. said it was unlikely to meet its sales guidance because of the outbreak in China, underscoring the epidemic’s threat to global growth and corporate profits. Gold climbed more than 1% in the day’s trading as investors flocked to safe-haven assets. In Canada, data released Tuesday showed factory sales decreased for the fourth straight month in December, perhaps paving the way for eventual easing from the Bank of Canada.

Optimism took hold of markets on Wednesday after China reported another decline in new coronavirus cases–and vowed its support for additional stimulus to counter a slowdown in growth. Adding to the upbeat mood was the Fed’s optimistic assessment of the U.S. economy offered in the minutes from its January meeting. In response, the greenback climbed to almost a three-year high, while the safe-haven yen sank to a nine-month low. In Canada, the annual pace of inflation jumped to 2.4% last month, its fastest rate in almost two years, largely fueled by rising gas prices. By Wednesday’s close, the Dow had gained 116 points, the Nasdaq was up 84, while the TSX jumped 67.

However, mounting gloom over the epidemic and its effects once again took hold of markets on Thursday. Although Q4 earnings for companies have generally exceeded or met expectations, forecasts for 2020 are being negatively impacted by the ongoing outbreak. Gold and bond prices rose as investors once again flocked to safe-haven assets. In the U.S., Labor Department data released Thursday showed the number of Americans applying for first-time unemployment benefits rose slightly last week but remains at an historically low level. By Thursday’s close, the Dow was off 128 points, paring declines of more than 300 points in earlier trading.

COMMUNITY BUILDERS

Three central Albertans recipients of Alberta Immigrant Impact Awards

15h ago

town calls suit 'frivolous and vexatious

Sylvan Lake council member suing municipality, mayor and CAO for $317,000

Oct 05, 2024

RDES HOLDING OCT. 5 DEMO

Make your smoke alarms work for you this Fire Prevention Week

Oct 04, 2024

N.A. Markets

Mixed Over Three Sessions For the three trading days covered in this report, the Dow surrendered 178 points to close at 29,220, the S&P 500 dropped 7 points to settle at 3,373, while the tech-heavy Nasdaq climbed 20 points to close at 9,751. In Canada, the TSX was up 96 points to end at 17,944.

Equities

Chinese credit boom a welcomed development for embattled economy

The timing of January’s outsized credit expansion was likely a little lucky, given most of the increase was likely delivered before the outbreak of the coronavirus took on steam as authorities sought to support the already struggling economy. Aggregate social financing jumped CNY 5.07T in January, up from CNY2.10T in December, and well ahead of consensus expectations of an increase of CNY4.2T. January’s data did not display any traces of the seasonal dip typically associated with the Lunar New Year holiday month as government bond issuance contributed strongly to the expansion in aggregate social financing. Looking ahead, credit expansion is likely to weaken sharply in February as the outbreak has caused widespread disruption in economic activity. Fewer working days in the month and businesses running well-below their normal capacity should reduce the supply and demand for credit. The People’s Bank of China (PBoC) has injected substantial liquidity into the banking system, and is likely to provide more monetary support, including additional liquidity, targeted lending, and lower rates, to cushion the virus’ drag on the economy. Indeed, policymakers lowered the rate on the one- and five-year Loan Prime Rate by 10bps and 5bps to 4.05% and 4.75%, respectively.

_DISCLAIMER

_{This report is provided to you for informational purposes only and is not intended to provide personal investment advice. This report does not include or constitute an investment recommendation and does not take into account the particular investment objectives, financial conditions, or specific needs of individual clients. Any statements regarding future prospects may not be realized. Before acting on this material, you should consider whether it is suitable for your particular circumstances and talk to your investment advisor.}

_{The author(s) of the report and the supervisors of the Global Portfolio Advisory Group may own securities of the companies included herein.}

_{Scotia Capital Inc. is what is referred to as an “integrated” investment firm since we provide a broad range of corporate finance, investment banking, institutional trading and retail client services and products. As a result we recognize that there are inherent conflicts of interest in our business since we often represent both sides to a transaction, namely the buyer and the seller. While we have policies and procedures in place to manage these conflicts, we also disclose certain conflicts to you so that you are aware of them. Please note that we may have, from time to time, relationships with the companies that are discussed in this report.}

_{The Global Portfolio Advisory Group prepared this report by analyzing information from various sources. Information obtained in the preparation of this report may have been obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may be also obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third party sources: Standard & Poor’s, Morningstar, Bloomberg, Credit Suisse AG, Perimeter Markets Inc., and FactSet. The information and opinions contained in this report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness.}

_{While the information provided is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the Global Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.}

_{Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized.}

_{Opinions, estimates and projections contained herein are those of the Global Portfolio Advisory Group as of the date hereof and are subject to change without notice. For that reason, it cannot be guaranteed by The Bank of Nova Scotia or any of its subsidiaries, including Scotia Capital Inc. This report is not, and is not to be construed as: (i) an offer to sell or solicitation of an offer to buy securities and/or commodity futures contracts; (ii) an offer to transact business in any jurisdiction; or (iii) investment advice to any party. Products and services described herein are only available where they can be lawfully provided. Scotia Capital Inc. and its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts mentioned herein as principal or agent.}

_{Trademarks are the property of their respective owners.}

_{This report is distributed by Scotia Capital Inc., a subsidiary of The Bank of Nova Scotia. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.}

_{® Registered trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management® consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. Private banking and International private banking services are provided in Canada by The Bank of Nova Scotia. Estate and trust services are}

_{GLOBAL PORTFOLIO ADVISORY GROUP}

_{provided by The Bank of Nova Scotia Trust Company. Portfolio management is provided by 1832 Asset Management L.P. and 1832 Asset Management U.S. Inc. Insurance services are provided by Scotia Wealth Management Insurance Services Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. International investment advisory services are provided in Canada by Scotia Capital Inc. Financial planning services are provided by The Bank of Nova Scotia, 1832 Asset Management L.P., and ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Scotia Wealth Insurance Services Inc. is the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank group of companies. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Insurance Agents (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc.}

_{Scotia Wealth Management consists of a range of financial services provided, in The Bahamas, by Scotiabank (Bahamas) Limited and The Bank of Nova Scotia Trust Company (Bahamas) Limited. International private banking services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas. International investment advisory services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Securities Commission of The Bahamas. International wealth structuring solutions are provided in The Bahamas by The Bank of Nova Scotia Trust Company (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas.}

_{Scotia Wealth Management consists of international investment advisory services provided, in Barbados, by The Bank of Nova Scotia, Barbados Branch, an entity licensed by the Barbados Financial Services Commission.}

_{Scotia Wealth Management consists of a range of financial services provided, in the Cayman Islands, by Scotiabank & Trust (Cayman) Ltd. International private banking services, international investment advisory services and international wealth structuring solutions are provided in the Cayman Islands by Scotiabank & Trust (Cayman) Ltd., an entity licensed by the Cayman Islands Monetary Authority.}

_{Scotia Wealth Management consists of international private banking services provided, in Peru, by Scotiabank Peru S.A.A, an entity supervised by the Peru Superintendence of Banking and Insurance.}