By Scotia Wealth Management - The Zukiwsky Group

SPONSORED

Market Watch: Oct. 25

Oct 26, 2019 | 10:17 AM

Big Picture – Stocks Struggle for Traction as Investors Assess Corporate Earnings

U.S. stocks were up slightly Monday to start the busiest week of the quarter for corporate earnings. With results in from roughly 20% of S&P 500 companies, earnings are projected to decline 4.7% for Q3 from a year ago, adding to concerns that U.S. economic growth is slowing. That would mark the third consecutive quarter of declining profits.

Meanwhile U.S. business investment continues to show signs of weakness. New orders for key capital goods fell more than expected in September and shipments also declined; however, the labour market remains largely unaffected by the slowdown.

It’s been a fairly quiet week so far as U.S. markets traded in a narrow range on Tuesday, Wednesday and Thursday.

In Canada, the TSX finished slightly lower on Tuesday as investors weighed the prospects of a minority Liberal government. On Wednesday, the TSX finished in the red, dragged down by key telecom names, which are encountering revenue headwinds as unlimited data plans take hold with consumers. However, the TSX was up slightly on Thursday, buoyed by the materials and tech sectors.

mayor hopes to meet housing minister this month

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

22h 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

Turning to interest rates, most analysts surveyed are expecting the Fed to ease U.S. rates next week for the third time since July. However, it’s looking less likely that Canada’s central bank will cut rates over the coming months, as the domestic economy continues to be resilient.

In currency news, the loonie edged higher against the greenback on Monday, hitting a new three-month high. While the Canadian dollar weakened Tuesday after domestic data showed a surprise drop in retail sales for August, the loonie steadied on Thursday, hovering above the 76-cent mark (US).

Markets – U.S. Markets Up Slightly; TSX Flat

For the four days covered in this report, the Dow added 35 points to close at 26,805, the S&P 500 rose 24 points to settle at 3,010, while the tech-heavy Nasdaq climbed 96 points to close at 8,186. In Canada, the TSX was fairly flat, losing 8 points to end at 16,369.

Equities/Strategy

Strategy

Equity market impact from social and fiscal policy of Canada’s new government– Canadian Prime Minister Justin Trudeau won a second term Monday night and maintained enough seats to possibly form a coalition with the New Democratic Party (NDP). The Liberals could rely on the support of any other party to pass legislation and survive confidence votes, but many observers have noted the NDP is the party most ideologically aligned with the Liberals.

Deficit spending is poised to continue in Canada’s 43rd Parliament, as new investments and tax cuts will ramp up from about $4bn next year, FY21, to $9bn by FY24. Voters appeared undeterred by the prospect of further deficit spending, particularly in light of the relatively small deficit, when compared to peers, a low federal debt load, and the current low interest rate environment.

The NDP and Liberal platforms both include generous spending commitments, centered on the welfare of low- and middle-income Canadians through affordable housing initiatives, childcare, health, pharma, and dental care, and tax cuts for lower brackets. These measures may translate to a small boost in confidence and consumption. However, the effects are likely to be limited given slowing global growth and high external risks.

The NDP proposed raising the corporate tax rate to 18% from 15%, revamping Canada’s electric grid – which might present opportunities for utilities – and investing in the auto, aerospace and forestry sectors in an effort to create jobs.

So far, equity markets have taken Monday’s results in stride, and the S&P/TSX Composite was little changed on Tuesday following the election. However, markets may reserve judgment until the Liberals flesh out their governance plans and table a budget.

(Bill Curry)

_{This publication has been prepared by ScotiaMcLeod, a division of Scotia Capital Inc. (SCI). This publication is intended as a general source of information and should not be considered as personal investment or tax advice. We are not tax advisors and we recommend that individuals consult with their professional tax advisor before taking any action based upon the information found in this publication. Opinions, estimates, and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein 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. Neither SCI nor its affiliates accepts liability whatsoever for any loss arising from any use of this publication or its contents. This publication is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any securities and/or commodity futures contracts. SCI, 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. SCI and/or its affiliates may have acted as financial advisor and/or underwriter for certain of the corporations mentioned herein and may have received and may receive remuneration for same. All insurance products are sold through Scotia Wealth Insurance Services Inc., the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank Group. When discussing life insurance products, ScotiaMcLeod advisors are acting as Insurance Advisors (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc. This publication and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusions contained in it be referred to without in each case the prior express consent of SCI.}