MARKET WATCH: Jan. 8, 2021

Wednesday was an historic day in the U.S. – in more ways than one — as Dems took control of the Senate with Georgia runoff victories for both Jon Ossoff and Raphael Warnock, the state’s first-ever black senator. The unexpected results from Tuesday’s election upended markets, sending investors on a buying spree of bank shares and other cyclicals that stand to benefit from further stimulus. Conversely, big tech names declined more than 2% as investors worried that a Democratic-controlled Congress would lead to higher taxes and tighter regulations. Meanwhile, 10-year U.S. Treasury yields climbed above 1% for the first time since March as investors dumped government bonds in anticipation of more government borrowing.

By early afternoon, however, came news that Trump rioters had stormed the Capitol in an effort to overturn the electoral college victory of President-elect Joe Biden. Despite the ensuing chaos, markets remained relatively calm. By day’s end, the Dow finished up 438 points, the S&P added 21, and the TSX jumped 146. The tech-heavy Nasdaq, however, dropped 78 points.

Markets were again resilient on Thursday, with the Nasdaq regaining ground lost from yesterday’s tech selloff. By day’s end the Nasdaq was up more than 325 points, while the Dow and S&P added 212 and 56, respectively. The TSX turned in a record close, adding 199 points to close at 18,027.

N.A. Markets Up, Despite Chaos in Washington

For the four trading days covered in this report, the Dow surged 435 points to close at 31,041, the S&P 500 added 48 points to settle at 3,803, while the tech-heavy Nasdaq rose 179 points to close at 13,067. In Canada, the TSX turned in four solid sessions, jumping 594 points to end at 18,027.

Strategy

Canadian employment declines for the first time since April, January figures may show further decline

The Canadian economy shed more than 60,000 jobs in December, bringing an end to the seven-month recovery, as new restrictions and worsening case trends lead employers to trim their payrolls.

Officially, Canada lost 62,000 jobs, nearly double the consensus estimate of a decline of 37,500, while the unemployment rate ticked up to 8.6% from 8.5% previously. The entirety of the December’s losses was in part-time work and were predominately in the accommodation and food services sector.

Since April, the labour market has recovered nearly 80% of the 3 million jobs lost during March and April, but the country still has 636,000 fewer jobs than in February. Encouragingly, the goods producing segment continues to perform well and added jobs yet again in December, led notably by the manufacturing sector.

We expect there to be another decline in employment in January 2021, as a curfew and increasingly stringent measures in Ontario and Quebec are enacted.

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by Scotia Wealth Management - The Zukiwsky Group

MARKET WATCH: Jan. 8, 2021

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