Most global equity markets overcame political and economic concerns this week to start the second half of 2013 on a positive note. Canada’s equity market failed to keep pace with many world markets. However, many sectors gained—including energy, which benefitted from rising oil prices as a result of political turmoil in Egypt. Positive economic news in the U.S. helped buoy North American markets in a holiday-shortened trading week. The economy continued to add jobs, with the 195,000 new positions created in June, pointing to solid employment growth. Figures for the previous two months were revised upward. A survey of manufacturing activity showed greater-than-expected expansion in factory activity in June, a positive sign for the economy. New orders for factory goods also strengthened in May. Eurozone worries returned as the resignations of two key politicians in Portugal threatened the country’s coalition government and raised concerns about Portugal’s commitment to austerity measures. Growing concerns about Greece’s ability to meet bailout conditions also brought the eurozone crisis back into focus for investors. Despite Portugal’s political woes, most European markets posted healthy gains. Decisions Thursday by the European Central Bank and the Bank of England to keep interest rates unchanged bolstered share prices. Both central banks indicated they intend to keep rates at current low levels. Continuing worries about China’s economy and a possible liquidity crisis among the country’s banks put pressure on Asian markets. However, liquidity concerns eased as the week progressed, paving the way for rising share prices. In other news this week: Canada’s employment picture was little changed in June as 400 jobs disappeared and the unemployment rate remained at 7.1%. Economists had expected a loss of 8,000 jobs. Car sales in both Canada and the U.S. were strong in June, showing consumer support for the economy. Canada recorded its 17th consecutive monthly merchandise trade deficit in May, although the gap narrowed as imports fell faster than exports. The Canadian dollar fell to its lowest level against its U.S. counterpart in nearly two years. Better-than-expected retail sales in the eurozone in May contributed to hopes that the region’s recession could be coming to an end. Ten-year U.S. treasury yields rose to their highest levels since mid-2011 on continued concerns that the Federal Reserve will begin cutting back economic stimulus. What’s ahead next week: Canada Bank of Canada business outlook survey. House prices, housing starts, building permits. U.S. FOMC minutes. Producer price index. Retail sales.
Posted on: Sat, 06 Jul 2013 15:23:33 +0000
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