By Scotia Wealth Management - The Zukiwsky Group

SPONSORED

Market Watch: Aug. 7

Aug 7, 2020 | 2:13 PM

Big Picture

U.S. Markets Rise on Hopes for Coronavirus Relief Package; Gold Hits New Highs

It was a solid start to the week for N.A. equities Monday, as U.S. stocks climbed, boosted by key tech names and signs that the rate of new coronavirus infections in the U.S. could be slowing.

While optimism over a new coronavirus relief package has driven U.S. equities higher this week, the U.S. dollar hit the skids in July, reaching a two-year low and recording its worst month in more than a decade. Analysts have expressed concern that massive federal spending is eroding the greenback’s status as the world’s dominant reserve currency.

A weak U.S. dollar was in focus again on Tuesday as gold surged past the $2,000 mark, hitting $2,009 an ounce at one point in the day’s session. This year’s sharp drop in U.S. Treasury yields has made gold much more attractive as a safe haven asset. By Tuesday’s close, the Dow was up 164 points, while the TSX jumped 199, buoyed by data showing domestic manufacturing activity had expanded in July for the first time in five months.

2024 Spring Rocket League Tournament

St. Patrick's Community School Esports team wins top spot in national tournament

16h ago

update

Mistrial declared in case against Red Deer massage therapist

22h ago

Rev it!

City of Red Deer offers free decibel reading event this Saturday

22h ago

It was another strong day for U.S. stocks Wednesday as hopes for a relief package continued to fuel investor optimism. By Wednesday’s close the Dow surged nearly 375 points, while the TSX was up 134.

Meanwhile U.S. gold futures on Wednesday hit a new intra-day record at $2,070 an ounce. So far in 2020, gold is up nearly 35%.

It was also a good day for oil prices, which rose to their highest levels since early March on a significant drop in U.S. crude inventories and the sliding dollar.

The economic data from the U.S. this week has been somewhat mixed. While the service industry gained momentum in July, hiring actually declined, a worrying sign of an unsteady labour market.

Thursday’s U.S. job numbers revealed 1.2 million new jobless claims—fewer than the 1.4 million expected but still at high levels historically. Finally, N.A. equities struggled for direction on Thursday as investors parsed U.S. jobs data and ongoing deliberations in Washington over coronavirus relief. By Thursday’s close, all four major indexes were up modestly.

N.A. Markets Continue Climbing

For the four days covered in this report, the Dow surged 959 points to close at 27,387, the S&P 500 rose 78 points to settle at 3,349, while the tech-heavy Nasdaq gained 363 points to close at 11,108. In three days of trading, the TSX added 410 points to end at 16,579.

Strategy

Canadian labour market recovery slows in July, though we expect the trend to remain upward-sloping

The July Labour Force Survey (LFS) in Canada showed the economy added 418.5k jobs in July, with the lion’s share represented by part-time employment (345.3k), and the unemployment rate ticked lower to 10.9%, down from 12.3% previously. Canada lost 3 million jobs in March and April at the height of the pandemic and with today’s numbers, and employment in the country is now 1.2 million below pre-crisis levels of employment, implying roughly 55% of lost jobs have been recovered.

The employment rebound in Canada has outpaced that in the U.S., which has recovered 42% of its payroll losses. Sector breadth was fairly robust today, with most of the gains coming from the services sector. Including July data, service-sector employment has retraced roughly 93% of its pandemic-induced decline.

In Ontario, employment rose by 151,000 (+2.2%) in July, building on an increase of 378,000 in June and bringing employment to 91.7% of its pre-pandemic February level. The recovery in Ontario started later than other provinces due to relatively later loosening of COVID-19related restrictions. Additional easing was introduced in most regions of the province in the same week the LFS was conducted. Accordingly, we expect some additional gains will be reported in August.

Today’s numbers hint at the diminishing returns associated with re-opening. The relatively easy gains have been made, and adding additional jobs could be harder without a more meaningful rebound in domestic and international activity.

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.

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 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.