Bourstad stock market simulations - Summary of the markets for the week ended on October 25, 2024

US dollar and commodities on the rise

The major financial asset classes were down this week: equities, bonds and crypto-currencies were all down. An interesting paradox is that the US dollar and commodities ended the week higher, even though these asset classes generally move in opposite directions. The week saw better-than-expected growth in retail sales in Canada in August, with sales by car and auto parts dealers up 3.5% on the previous month; according to the National Bank's weekly review, excluding automobiles, retail sales would have fallen by -0.7% in August. At its policy meeting on October 23, the Bank of Canada decided to cut its key rate by -0.5%, to 3.75%. In the United States, the Conference Board's index of leading indicators fell by -0.5% in September to 99.7; this index has not risen for 31 months. Over the coming week, we'll be watching: in Canada, August gross domestic product (Thursday); in the U.S., the Conference Board's household confidence index (Tuesday), Q3 gross domestic product (Wednesday) and October employment data (Friday). We'll also be keeping an eye on the many corporate earnings releases scheduled for the week.

Four of the six stock markets we follow ended the week down. The only markets up were the Shanghai Stock Exchange with a gain of 1.2% and the NASDAQ 100 with 0.1%. The New York Stock Exchange is down -1.0%, while the Toronto and Paris exchanges are down -1.5%. The Tokyo Stock Exchange was the worst performer, down -2.7%, as the anticipated defeat of the Liberal Democratic Party in today's parliamentary elections marked the start of a period of uncertainty for the country; this party has ruled Japan almost without interruption since 1945.

Yields on 10-year government bonds are rising for three of the four highly rated countries we track. Higher yields mean lower bond prices, given the inverse relationship between yields and bond prices. The U.S. bond yield, the market's main benchmark, is up 16 bps (1 basis point or bps = 0.01%) to 4.25%. The Canadian bond rate is up 13 bps, making the Canadian rate 99 bps lower than the U.S. rate. Germany's bond yield rises by 10 bps to 2.30%. Japan's bond yield fell by -2 bps to 0.95%.

On the commodities market, three of the four commodities we follow are up. US oil posted the biggest gain, up 3.7%, as Israel's retaliation against Iran appeared inevitable. Corn jumped 2.6%, as US exports of this cereal during the week were the highest since 2021. Gold gained 1.0% and is now approaching the 2750 USD threshold. The only commodity to fall, among those we follow, is copper, which is down -0.3%; however, the red metal is up 12.3% since the start of 2024.

In the crypto-currency sector, the two cryptos we follow are both down: bitcoin by -2.8% and ethereum by -6.5%.

On October 25, it cost 0.9¢ CAD more to buy one US dollar than on October 18. The euro and yen are also down against Uncle Sam's dollar: the single European currency by -0.7% and the Japanese currency by -1.8%.

See the detailed table by following this link:

https://iclf.ca/DL/BTTT_sommaire_marches_241025.pdf

 

Paul Bourget
Project Director, Bourstad
CIRANO
paul.bourget@cirano.qc.ca

 

About CIRANO (www.cirano.qc.ca )

The Center for Interuniversity Research and Analysis of Organizations (CIRANO) is a multidisciplinary, liaison and transfer research center, whose mission is to accelerate the transfer of knowledge between the research community and users in industry and public services.

 

About BOURSTAD (www.bourstad.ca )

The Bourstad program is an activity of the Center for Interuniversity Research and Analysis of Organizations (CIRANO) which receives support from many partners for this financial education project: the Autorité des marchés financiers, its main partner, TD Bank, CFA Montreal , the Canadian Investment Regulatory Organization (CIRO), Les Affaires, Finance Montreal, TMX Group, Hyprasoft, Groupe Investissement responsable and QuoteMedia.