By Scotia Wealth Management - The Zukiwsky Group

sponsored

Market Watch: May 22, 2020

May 22, 2020 | 3:03 PM

Big Picture

Markets Holding Out Hope for Strong Recovery

While economic data continues to paint a dark picture for the global economy, N.A. markets resumed their ascent this week as many investors continue to hold out optimism for a strong recovery, or perhaps a medical breakthrough in the fight against coronavirus. On Monday the Dow jumped more than 900 points on initial hopes for a potential vaccine after drug maker Moderna reported signs of progress in its initial human trials. Also lifting sentiment was a sharp uptick in crude prices, which rose 8% in light of rising global demand and record supply cuts. However, Monday’s exuberance faded on Tuesday as a report cast doubt over data quality in Moderna’s trial. By Tuesday’s close, the Dow was off nearly 400 points, while the Nasdaq dropped 50. In Canada, the TSX jumped nearly 250 points as investors led a catch-up rally following the Victoria Day holiday.

The three major U.S. indexes recorded their fourth gain in five sessions Wednesday as investors once again looked toward a swift recovery, buoyed by rising oil prices and additional pledges of help from the Federal Reserve. By Wednesday’s close, the Dow surged 369 points, while the S&P 500 added 49 points, as all 11 S&P sectors recorded gains.

However, N.A. markets opened lower and stayed in the red Thursday as jobs data continue to paint a troubling picture. In the U.S., workers filed 2.4 million new jobless claims last week, a slight drop-off from previous weeks. And yet the numbers are staggering, with U.S. claims over the past nine weeks topping 38 million. And that total doesn’t account for the hundreds of thousands of self-employed and gig-economy workers. Meanwhile, Canada lost more than 226,000 jobs in April as the economy shut down, with trade, leisure and hospitality among the hardest-hit industries. Also weighing on sentiment Thursday were new concerns over growing trade tensions between the U.S. and China. Finally, oil prices rose 3% Thursday, advancing for the sixth straight session as producers continue to curtail supply.

mayor hopes to meet housing minister this month

Alberta demands Ottawa back off on housing funding stripped from Red Deer

1h ago

Last seen Jan. 15

Missing: Courtney Cattleman, 17, of Maskwacis

7h ago

eyes up

Air Spray training around Red Deer Regional Airport

7h ago

N.A. Markets Continue to Regain Lost Ground

For the four days covered in this report, the Dow surged 789 points to close at 24,474, the S&P 500 added 85 points to settle at 2,949, while the tech-heavy Nasdaq jumped 270 points to close at 9,285. Closed for trading on Monday, the TSX gained 246 points in three sessions to end at 14,885.

Strategy

Governor Poloz offers upbeat outlook in final appearance as chief of BoC

Outgoing Bank of Canada (BoC) Governor Stephen Poloz spoke at his final press conference yesterday before his term expires and offered an optimistic assessment of Canada’s ability to recover from the pandemic-induced slowdown. Indeed, Governor Poloz acknowledged that while the central bank needs to be prepared for a wide range of outcomes, he’s more optimistic than many pundits on the outlook for recovery. Mr. Poloz likened the shock to a temporary pause in activity that may not trigger the types of behavioural changes typically associated with recessions and depressions, in large part due to generous income support offered by the federal government. The Governor added that the Canadian economy appears to be tracking closely to the bank’s best-case scenario outlined in the most recent Monetary Policy Report (MPR), which called for a sharp 15% GDP contraction. Further, he expects that when the economy can reopen, production will return rapidly. Nonetheless, Mr. Poloz recognized there may be scarring effects on overall production capacity, given some firms may not reopen post-lockdown, but a wave of innovation and firm creation will flow in to fill the gap.

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. Copyright 2019 Scotia Capital Inc. All rights reserved.}