“Faith is taking the first step, even when you don’t see the whole staircase” – Martin Luther King, Jr.

TSX Finishes Positive for Sixth Straight Day, Wall Street Winning Streak Snapped

Don’t look now, but the S&P/TSX Composite is on a Six-Day winning streak and is up 1,100 points (over 8%) since its recent bottom on Christmas Eve. The TSX unofficially closed Friday at 14,939.18. When the markets closed on Christmas Eve, the TSX sat at 13,780.20.

On Wall Street, all of the NASDAQ, Dow Jones Industrial Average (DJIA), and S&P 500 edged lower on Friday, snapping Five-Day winning streaks.

Since Christmas Eve, the NASDAQ has rebounded by around 12%, the Dow Jones has jumped around 9%, and the S&P 500 has increased by around 10%.

Nearly all of the December losses on Wall Street and Bay Street have been recovered since market close on Christmas Eve. Much of the positive momentum this week was driven by hopes of a US-China trade deal.

This recent turn of events serves as an important reminder just how difficult trying to time the market can be when emotion and narratives are at play. The investor who read the negative news in December (and into January) and decided to sell off at or around Christmas Eve – rather than patiently waiting out the storm – has now missed out on nearly gains of nearly 10% or more.

Bank of Canada Holds Key Rate at 1.75%

On Wednesday, the Bank of Canada head Stephen Poloz opted to hold the BoC’s key rate steady at 1.75%. Though there had been the possibility of an additional hike, soft oil prices forced the BoC to temper its economic outlook for the next several months.

Indeed, the BoC now projects only a 1.7% growth in the Canadian economy in 2019, where previously the bank had forecasted growth at 2.1%. Despite this, the bank remains optimistic that 2019’s second quarter will see the economy strengthen, at which point further rate hikes might come into play.

The BoC did stress that more rate hikes would be necessary over time, potentially into the 2.5% – 3.5% range.

As always, there is a fine line to be walked when dealing with the potential economic impact of rate increases. Inflation needs to be factored in (one key reason why rate hikes happen), but raising the key rate tends to take some wind out of the economy’s sails.

Weekly Update – By The Numbers

North America

• The TSX closed at 14,939, up 512 points or 3.55% over the past week. YTD the TSX is up 4.30%.
• The DOW closed at 23,996, up 563 points or 2.40% over the past week. YTD the DOW is up 2.86%.
• The S&P closed at 2,596, up 64 points or 2.53% over the past week. YTD the S&P is up 3.55%.
• The NASDAQ closed at 6,972, up 233 points or 3.46% over the past week. YTD the NASDAQ is up 5.08%.
• Gold closed at 1,288, up 2.00 points or 0.08% over the past week. YTD gold is up 0.23%.
• Oil closed at 51.7, up 3.42 points or 7.08% over the past week. YTD oil is up 12.81%.
• The USD/CAD closed at 0.7543, up 0.0066 points or 0.88% over the past week.YTD the USD/CAD is up 2.93%.

Europe/Asia

• The MSCI closed at 1,957, up 53 points or 2.78% over the past week. YTD the MSCI is up 3.82%.
• The Euro Stoxx 50 closed at 3,070, up 28 points or 0.92% over the past week. YTD the Euro Stoxx 50 is up 2.30%.
• The FTSE closed at 6,918, up 81 points or 1.18% over the past week. YTD the FTSE is up 2.82%.
• The CAC closed at 4,781, up 44 points or 0.93% over the past week. YTD the CAC is up 1.06%.
• DAX closed at 10,887, up 119.00 points or 1.11% over the past week. YTD DAX is up 3.11%.
• Nikkei closed at 20,360, up 798.00 points or 4.08% over the past week. YTD Nikkei is up 1.72%.
• The Shanghai closed at 2,554, up 39.0000 points or 1.55% over the past week. YTD the Shanghai is up 2.41%.

Fixed Income

• The 10-Yr Bond Yield closed at 2.7, up 0.0400 points or 1.50% over the past week.YTD the 10-Yr Bond Yield is up 0.37%.

Sources: Globe Advisor, Advisor.ca, Dynamic Funds, CIBC

This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.