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The week in the markets –
July 12, 2024
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A drop in consumer prices brought mixed reactions from the markets
- U.S. consumer prices fell by 0.1% in June, the first drop in over four years, bringing the annual rate of inflation to 3%.
- The Russell 2000 surged by over 3% Thursday (a rare occurrence whenever the S&P 500 falls: this was last seen in 2008).
- Gold prices rose above $2,400 per ounce, driven by expectations of U.S. Federal Reserve rate cuts.
In June, U.S. consumer prices dipped by 0.1% from the previous month, marking the first decline in over four years. This reduction brought the annual inflation rate to 3%, the lowest in more than three years. The core Consumer Price Index (which excludes food and energy) rose by 0.1% monthly and 3.3% annually, the smallest increase since April 2021. A significant factor was a 3.8% drop in gasoline prices, which offset increases in food and shelter costs. Economic indicators also showed a decrease in used vehicle prices. You might have expected the market’s reaction to be positive, but not at all. Markets went down on the news, especially the tech-heavy NASDAQ. These figures strengthened the likelihood of a U.S. Federal Reserve rate cut in September, with additional cuts possible by year-end. The market is now pricing in at least two cuts in 2024, with the first being in September. The odds for a July cut didn’t move.
If the NASDAQ didn’t care much for that news, the Russell 2000 loved it (this index is made up of small-cap companies, which are typically more affected by interest rate changes). It surged by more than 3% on Thursday, defying the broader market's decline. It marked the first time since 2008 that the Russell 2000 gained at least 3% while the S&P 500 fell. The last occurrence was on October 10, 2008, when the Russell 2000 rose 4.6% as the S&P 500 dropped 1.2%. This event was notable because it has only happened twice since 1979. Despite Thursday’s gains, however, the Russell 2000 has lagged in 2024, increasing by just under 6%, compared to the S&P 500’s 17% rally.
Gold prices increased by over 1% on Thursday, breaking above the $2,400 per ounce mark (its highest price since May 22), after U.S. consumer prices unexpectedly fell. This rise in gold prices was attributed to the expected drop in rates following the surprisingly smaller-than-expected annual inflation increase we mentioned earlier. The U.S. dollar's decline to a one-month low and the fall in the U.S. 10-year Treasury yield to a four-month low further enhanced gold's appeal.
Listen to this week’s podcast for further insights.
This week's market closing value - week ending July 12, 2024
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 22,701.06 | 604.43 | 2.74% | 8.31% | 13.11% | 6.60% |
| S&P 500 | 5,626.43 | 59.11 | 1.07% | 21.28% | 30.07% | 14.33% |
| DJIA | 40,001.36 | 625.49 | 1.60% | 9.17% | 20.40% | 8.90% |
| FTSE 100 | 8,252.91 | 48.98 | 1.93% | 11.84% | 15.03% | 3.51% |
| CAC 40 | 7,724.32 | 48.70 | 1.25% | 4.07% | 6.70% | 7.02% |
| DAX | 18,748.18 | 272.73 | 2.10% | 13.74% | 18.52% | 9.03% |
| Nikkei | 41,190.68 | 278.31 | 2.55% | 13.13% | 16.97% | 6.32% |
| Hang Seng | 18,293.38 | 493.77 | 2.87% | 10.41% | 0.52% | -7.59% |
| CURRENCY RETURNS | CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3633 | 0.0001 | 0.01% | 2.86% | 3.38% | 0.91% |
| Euro | 1.4868 | 0.0091 | 0.61% | 1.63% | 1.30% | 0.25% |
| Yen | 0.0086 | 0.0002 | 1.86% | -8.09% | -9.29% | -6.48% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.59 | -0.03 | Oil | $82.20 | -$0.88 |
| 5-year | 3.37 | -0.11 | Gold | $2,412.08 | $23.72 |
| 10-year | 3.41 | -0.09 | Natural Gas | $2.31 | -$0.02 |
| CANADIAN PRIME RATE |
|---|
| 6.95% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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