By Scotia Wealth Management - The Zukiwsky Group

sponsored

Market Watch: July 30, 2021

Jul 30, 2021 | 11:56 AM

Big Picture

Markets digest latest batch of earnings

There was plenty for Market Watchers to digest this week with market-moving news out of China and the U.S. as well as noteworthy economic data from the IMF and Canada. Starting in the U.S., Q2 GDP grew at a 6.5% annual clip lifting the economy’s size above its pre-pandemic level. The milestone underlines how quickly the U.S. economy has recovered as U.S. consumers resumed spending in concert with business re-openings, vaccinations and large infusions of government aid. The Federal Reserve has also played a key role implementing easy-money policies at the start of the pandemic which will continue the bank confirmed at this week’s two-day policy meeting. When the Fed does start to tighten it will begin with a reduction, or tapering, in monthly Treasury and mortgage bonds purchases. Also in the U.S., President Biden’s US$1 trillion infrastructure deal cleared its first procedural hurdle mid-week advancing to the Senate where it still faces a long road to being approved. On the Q2 U.S. earnings front, a large majority of S&P 500 companies continue to top earnings estimates and exceed revenue projections buoying markets south of the border. Turning to China, the Beijing government continued its crackdown on the technology sector announcing new rules on private tutoring and online education firms as well as ordering Internet giants to fix certain practices that previously went unquestioned. In economic news, the International Monetary Fund released its latest outlook Tuesday leaving its 6% global growth forecast intact from its April estimate. The big change to the IMF’s outlook was an increase in growth projections for developed countries and reductions for developing countries as lower vaccination rates have left them more vulnerable to economic fall-out. Finally in Canada, inflation decelerated for the first time this year with CPI up 3.1% yoy in June compared to 3.6% in May. The read exceeds the Bank of Canada’s 1% to 3% inflation range but the decrease supports the bank’s view that the price run-up is transitory.

N.A. markets were mixed this week

For the four days covered in this report, the Dow added 23 pts. to close at 35,084, the S&P 500 gained 8 pts. to finish at 4,419 and the Nasdaq fell 58 pts. to settle at 14,778. In Canada, the TSX rose 123 pts. to end at 20,311 pts., a new record high.

Last seen March 31

Missing: Eugenie Headman, 66, of Maskwacis

Apr 04, 2026

mayor hopes to meet housing minister this month

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

Apr 02, 2026

Last seen Jan. 15

Missing: Courtney Cattleman, 17, of Maskwacis

Apr 02, 2026

Strategy

Canada’s economy sprang back to life at the end of the second quarter, as vaccine-led reopening spurred a return to growth.

Data from Statistics Canada released this morning showed GDP contracted 0.3% in May, which met expectations, but their flash estimate for June showed output likely expanded 0.7%. Annualized growth is on pace to come in at 2.5% in Q2 ’21, which is in-line with the current consensus estimate but ahead of the Bank of Canada’s forecast of 2% for the three month period. Overall, in May, 12 of 20 industrial sectors were down as both services-producing (-0.2%) and goods producing industries (-0.4%) contracted. Construction and, unsurprisingly, retail sales were among the largest detractors from growth in May amid renewed lockdowns. The guidance for June indicates gains in retail, accommodation and food services, manufacturing, mining/energy, but contractions in construction and wholesale trade. June’s flash reading suggests solid breadth for Canadian GDP growth ahead, which we expect to build over the summer months. Canadian GDP is now at 98.5% of its pre-crisis level, while the goods sector has fully recovered but services remain down ~2.1%.

_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.}