By Scotia Wealth Management - The Zukiwsky Group

Sponsored

Market Watch: October 1, 2021

Oct 1, 2021 | 2:22 PM

Big Picture

North American equity markets lose ground amid inflation fears, rising bond yields

U.S. indexes were mixed Monday, with tech shares slipping and financials climbing, as 10-year U.S. Treasury yields briefly topped 1.5 per cent for the first time since June. Energy stocks also rose Monday as oil prices were pushed higher by ongoing supply issues. That was good news for Canada’s main index, as surging crude prices lifted the energy sector to its highest level in nearly three months.

It was a rough Tuesday, however, with N.A. markets suffering one of their steepest sell-offs in 2021, as rising bond yields continued to batter the tech sector. The yield on 10-year U.S. Treasurys climbed for a sixth consecutive day to its highest level (1.53%) since June. The quick spike in bond yields is being felt in Canada’s mortgage market, where some smaller lenders have already raised fixed mortgage rates. By Tuesday’s close, the Dow had lost 569 points, while the Nasdaq dropped 423. Meanwhile, the TSX lost 289 points, dragged down by the tech sector.

U.S. stocks were mixed again Wednesday, with the Dow and S&P 500 up slightly, while the Nasdaq lost ground. The yield on 10-year U.S. Treasurys continued its ascent, finishing at 1.54 per cent. The TSX registered a nominal 16-point loss, with the tech and materials sectors in the red.

mayor hopes to meet housing minister this month

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

20h ago

Last seen Jan. 15

Missing: Courtney Cattleman, 17, of Maskwacis

Apr 02, 2026

eyes up

Air Spray training around Red Deer Regional Airport

Apr 02, 2026

All four major North American equity indexes finished Thursday lower after a choppy session, with U.S. losses mounting in the final minutes of trading. By Thursday’s close, the Dow had fallen 547 points, while the TSX had shed nearly 90. Finally, with only hours to spare, U.S. President Biden on Thursday evening signed legislation to avoid a partial government shutdown and keep the U.S. government funded until December 3.

A punishing week for North American equity markets

For the four trading days covered in this report, the Dow tumbled 954 points to close at 33,844, the S&P 500 dropped 148 points to settle at 4,307, while the tech-heavy Nasdaq plummeted 600 points to close at 14,448. In Canada, the TSX fell 333 points to end at 20,070.

Strategy

Investors must distinguish between short-term and structural reasons for equity market weakness

Volatility continued to roil financial markets, with U.S. equities notching their biggest monthly selloff since March 2020 as the S&P 500 index fell nearly 5 per cent in September. Even so, the S&P 500 has now gone an incredible 317 trading days in a row above its 200-day moving average, one of the longest streaks ever. Now, investors are contending with a litany of risks that include the Federal Reserve winding down its stimulus amid mounting fears about slowing economic growth, elevated inflation, supply-chain bottlenecks, a global energy crunch, persistent COVID-19 risk, the legislative logjam in the U.S. Congress, and policy risks emanating from China.

Against this backdrop, it may not be surprising that we are seeing equities roll over to a certain degree. However, it is essential to understand which issues may create permanent, or structural, change and which ones create short-term volatility that investors can take advantage of. For example, U.S.-based policy risk may fade in the coming weeks, meaning related weakness could represent an opportunity on which investors can capitalize. Conversely, the ongoing, rapid and significant shifts in Chinese government policy and the sell-offs in related equities may be more structural in nature, which could prompt some investors to reconsider their allocations to the country.

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 SCOTIA WEALTH MANAGEMENT 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.