Market Watch: March 3

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North American equity markets finished mixed on Wednesday as investors combed through comments from U.S. Federal Reserve Board officials, speculating how high rates may go. The Dow gained 5 points on Wednesday, while the S&P 500 fell 19 and Nasdaq tumbled 76 points, respectively. In Canada, the TSX saw a 39-point gain.

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North American equities finished higher on Thursday as Treasury yields retreated, helped by comments from Atlanta Federal Reserve President Raphael Bostic. Mr. Bostic stated that he favoured a slow and steady approach to interest rate hikes for the Fed in an argument for quarter-point hikes. By the end of trading, the Dow gained 342 points, while the S&P 500 and Nasdaq rose 30 and 84 points, respectively. In Canada, the TSX gained 77 points.

North American Indexes observe gains

For the four trading days covered in this report, the Dow gained 187 points to close at 33,004, the S&P 500 gained 11 points to settle at 3,981, and the tech-heavy Nasdaq rose 68 points to close at 11,463. In Canada, the TSX gained 118 points to end at 20,337.

Strategy

Canadian economy remained unchanged in Q4 2022 but started 2023 strongly

Canadian GDP rose 0.3 per cent in January, led by oil and gas extraction and wholesale trade. However, fourth-quarter annualized GDP remained unchanged, below consensus estimates of 1.6 per cent and following five consecutive quarterly increases. The stalled growth was mainly driven by QoQ declines in business investment in machinery and equipment (-7.8 per cent) and housing (-2.3 per cent) but offset by higher household (0.5 per cent) and government spending and improved net trade. Also, a smaller accumulation of inventories applied downward pressure on GDP growth.

Easing supply chain issues enhanced manufacturers’ capacity to meet consumer demand. Households spendings on durable goods increased by 3.4 per cent, led by the purchase of new trucks, vans, and sport utility vehicles (+10.3 per cent), used motor vehicles (+7.9 per cent) and new passenger cars (+5.8 per cent). However, service spending decreased from 1.1 per cent in the third quarter to 0.3 per cent in the fourth quarter. Exports of goods and services increased by 0.2 per cent, while imports fell by 3.2 per cent in the fourth quarter.

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