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.