Market Watch: July 8

It was a volatile session Wednesday on Wall Street with all three indexes recording minor gains, as investors sifted through the minutes from the latest Federal Reserve meeting. It was another down day for the TSX, however, as weakness in oil and gold prices once again weighed on the index.

In news from the U.K. Thursday, Boris Johnson said he would step down as prime minister after a tidal wave of key government officials resigned from his government. News of Johnson’s exit was good news for the pound, which registered gains following the news. Back on Wall Street, U.S. indexes closed the day higher in a broad-based rally that included everything from financials to consumer staples. By Thursday’s close, the Dow was up 347 points, while the S&P 500 and Nasdaq added 57 and 259, respectively. In Canada, it was a bounce-back session for the TSX, which saw a strong rebound in commodity prices, raising the index 333 points.

North American Indexes Gain Ground

For the four trading days covered in this report, the Dow added 287 points to close at 31,384, the S&P 500 rose 77 points to settle at 3,902, while the tech-heavy Nasdaq jumped 493 points to close at 11,621. In Canada, the TSX gained 202 points to end at 19,063.

Strategy

The S&P Global Canada Manufacturing PMI fell to 54.6 in June of 2022 from 56.8 in the previous month

The latest reading pointed to the 24th straight month of expansion in factory activity but at the slowest pace in 17 months. The two largest components of the PMI by weight, output and new orders, were behind the latest moderation. Both sub-indices dipped notably from May and fell to 24- and 23-month lows, respectively. Output expanded at the softest pace for two years, while new orders rose only moderately amid persistent inflationary pressures and material shortages.

However, faced with increasing orders, firms in Canada raised their headcounts. The rate of growth was solid, but softer than that seen in May, and the weakest for nine-months. On the price front, input price inflation rose substantially, and at an accelerated pace in June. Higher prices were reported for a range of goods and services including metal, fuel, energy, resin and transportation. Overall, the rate of increase was marked, and among the quickest in the series history. A general uptick in expenses contributed to another sharp increase in selling prices at the end of the quarter. Also, slower growth was recorded for employment and purchasing activity, while exports fell for the first time in four months.

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by Scotia Wealth Management - The Zukiwsky Group

Market Watch: July 8

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