By Scotia Wealth Management - The Zukiwsky Group

SPONSORED

MARKET WATCH: March 12, 2021

Mar 12, 2021 | 12:45 PM

Big Picture

A Volatile Week for Technology Stocks as Signs of Recovery Build

Technology stocks continued their recent decline Monday, pulling the Nasdaq index into correction territory, as U.S. government bond yields continued climbing, making high-growth technology names a bit less attractive. On Monday, the yield on the 10-year U.S. Treasury ticked up to nearly 1.6%, its highest level since last February. Meanwhile, a rotation toward cyclical names continued, driven by the expectation that the $1.9-trillion stimulus package will be signed into law this week by U.S. President Biden. By Monday’s close, the Nasdaq dropped 311, the Dow climbed 306, and the S&P was down 20 points. In Canada, the TSX was up 77 points, buoyed by the Financials and Real Estate sectors.

North American markets rallied on Tuesday, with the Nasdaq recovering roughly 4% — its biggest single-day rise since early November — as U.S. bond yields retreated and investors looked for bargains in the technology sector. The TSX closed at a record high, gaining 141 points to end the day at 18,599. Meanwhile, the Dow hit a record intraday high but lost some ground later in the session, finishing up just 30 points.

The Dow, however, notched a fresh record Wednesday, climbing 462 points, after U.S. inflation data showed a negligible increase in consumer prices for February, easing investors’ inflation worries. The Nasdaq and S&P finished fairly flat, while the TSX added 91 points. As expected, the Bank of Canada on Wednesday held its overnight rate steady at 0.25%, noting once again its intention to keep rates low until 2023.

amends not made: lacombe pride

Campaign on to reinstate Lacombe-Ponoka MLA booted from UCP caucus for transphobic comments

14h ago

"overreach"

Red Deer and Red Deer County mayors perplexed over rationale of proposed Bill 20

18h ago

Phase 2 upgrades at Dickson Dam to begin this year

20h ago

Technology shares, especially FAANG stocks, were once again in favour Thursday as fears of rising rates diminished somewhat, leading to an increased sense of calm in the bond market. The Nasdaq surged nearly 330 points, while the Dow and S&P added 189 and 41, respectively. It was a broad-based rally on Thursday with all 11 S&P sectors trading higher. In Canada, the TSX staged a rally of its own, jumping nearly 155 points to a new record close at 18,845.

Dow, TSX Hit New Record Highs

For the four trading days covered in this report, the Dow surged 989 points to close at 32,485, the S&P 500 added 97 points to settle at 3,939, while the technology-heavy Nasdaq added 479 points to close at 13,399. In Canada, the TSX continued its strong recent showing, gaining 464 points to end at 18,845. GLOBAL PORTFOLIO ADVISORY GROUP

Strategy

Canada’s February Labour Force Survey showed encouraging breadth and headline results

The Canada economy added more than 259,000 jobs in February as restrictions in many regions were eased, easily surpassing the consensus estimate for a gain of 75,000 and fully reversing January’s 212,800 decline.

The unemployment rate fell to 8.2%, down from 9.4% and was better than the estimated 9.2%, while the labour force participation rate held steady at 64.7%.

Job growth skewed more toward part-time employment, 171,000 vs. 88,200 full-time positions, but the regional breadth of the survey is encouraging. Perhaps the most promising piece of the report was that total hours worked increased 1.4%, driven by gains in the wholesale and retail trade sector. In our view, this adds upside risk to the 1Q GDP numbers and suggests reopening efforts are progressing well in regions that have relaxed restrictions.

Of the sixteen sector classifications in the Labour Force Survey, six were higher than last February, one flat, and nine remain below pre-crisis levels. Accommodations & food services and information, culture & recreations combined account for ~440,000 jobs lost in the year. Removing those two sectors that were hardest hit by the pandemic, the Canadian economy is down ~160,000 jobs, most of which are in the retail and wholesale trade sector. We think these sectors should see better recovery momentum in the months ahead as vaccines are administered and restrictions are rolled back.

Overall, we think today’s report will stoke some expectation that the Bank of Canada may start removing some of its ultra-accommodative policy, given its recent emphasis on labour market indicators as it gauges the degree of stimulus needed in the economy. We think there are likely to be significant changes to forecasts and asset purchase tapering at its next meeting in April.

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 2021 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 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.