Media Room
The week in the markets –
July 5, 2024
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A calm short week before the upcoming earnings action
- Sector performance: technology and consumer discretionary stocks led gains.
- Economic data: U.S. manufacturing output fell, and the U.S. Federal Reserve gave positive signals on its monetary policy.
- Global events: the euro fluctuated after French elections.
Sector performance divergence
Divergence is the new keyword these days and it was highlighted in sector performance within the stock market. While major indices like the S&P 500, Nasdaq-100 and the Dow Jones all had gains by the July 4 break, these were largely driven by a few standout sectors (with tech and consumer discretionary stocks leading the charge). This trend shows the market's current reliance on a narrow group of high-performing stocks to drive overall gains, while broader market segments lag behind. This is a theme we’ve discussed a lot before and will continue to do so in the future. International markets had a great week, especially the CAC 40 (a key French stock market index) and the Nikkei (Japan’s main stock market index), which have struggled recently.
Economic data and U.S. Federal Reserve commentary
The release of economic data and commentary from U.S. Federal Reserve (the Fed) Chair Powell had a notable impact on the market. The ISM Purchasing Managers’ Index (a monthly gauge of U.S. manufacturing output) fell to 48.5 in June. This was below expectations and signalled further contraction in the manufacturing sector. This decline was marked by lower employment and price components, though new orders saw a slight uptick. In addition, the Job Openings and Labor Turnover Survey (JOLTS report) indicated a rise in job openings to 8.14 million, suggesting there is some fight left in the labour market, despite slight increases in vacancy and quit rates. Chair Powell gave accommodating remarks at the Sintra conference, emphasizing the resumption of the disinflation trend and progress on inflation. This initially boosted stocks and treasuries while weakening the dollar. However, this sentiment was tempered by the JOLTS data, which reversed some of the earlier gains.
Impact of global events and crude oil prices
Political risk is making its presence felt again on the trading floors. The euro experienced fluctuations following the French election results, where the National Rally party made significant gains, raising the possibility of a hung parliament. Markets generally perceive this as a favourable outcome, since it tends to maintain the status quo (markets hate the notion of change and uncertainty). Meanwhile, crude oil prices were volatile, driven by concerns over Hurricane Beryl, which was forecast to become a category four hurricane as it approached the Gulf of Mexico.
Next week marks the beginning of the earnings season in the U.S.; this could be a trigger for some volatility and will certainly bring its share of news and market action.
Listen to this week’s podcast for further insights.
This week's market closing value - week ending July 5, 2024
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 22,096.63 | 259.69 | 1.19% | 5.43% | 9.91% | 5.96% |
| S&P 500 | 5,567.32 | 96.34 | 1.38% | 19.99% | 28.50% | 14.17% |
| DJIA | 39,375.87 | 252.93 | 0.27% | 7.45% | 17.86% | 8.79% |
| FTSE 100 | 8,203.93 | 39.81 | 1.51% | 9.72% | 14.14% | 2.98% |
| CAC 40 | 7,675.62 | 196.22 | 3.49% | 2.78% | 7.61% | 6.67% |
| DAX | 18,475.45 | 240.00 | 2.17% | 11.40% | 18.82% | 8.15% |
| Nikkei | 40,912.37 | 1,329.29 | 3.03% | 10.32% | 13.32% | 5.76% |
| Hang Seng | 17,799.61 | 81.00 | 0.03% | 7.33% | -4.30% | -8.45% |
| CURRENCY RETURNS | CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3632 | -0.0051 | -0.37% | 2.85% | 2.64% | 0.83% |
| Euro | 1.4778 | 0.0124 | 0.84% | 1.01% | 2.50% | 0.13% |
| Yen | 0.0085 | 0.0000 | -0.32% | -9.76% | -7.66% | -6.80% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.62 | -0.02 | Oil | $83.08 | $1.64 |
| 5-year | 3.49 | -0.03 | Gold | $2,388.36 | $63.47 |
| 10-year | 3.50 | 0.00 | Natural Gas | $2.33 | -$0.28 |
| 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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