Bourstad stock market simulations - Summary of the markets for the week ended on November 8, 2024

Immediate reactions to the US election: equities rise and bond yields jump

The main event of the week was, of course, the outcome of the US election. At the end of the week, five of the six asset classes we track ended higher; only commodities ended with no clear direction. In Canada, there was weak job growth in October, with 15,000 new jobs, while the employment rate fell by -0.1% to 60.6%; the unemployment rate was unchanged at 6.5%. In the United States, the election result was obviously the factor that most moved the markets. The Federal Reserve also lowered its key rate by -0.25%, which will now fluctuate within the 4.5%-4.75% range. Over the coming week, we'll be watching: in Canada, September building permits (Tuesday) and September manufacturing sales (Friday); in the USA, October consumer price index (Wednesday), October industrial price index (Thursday) and October retail sales (Friday).

Five of the six stock markets we follow ended the week higher. The Shanghai Stock Exchange recorded the biggest gain, up 5.5%, as some economic data confirm that the major support measures implemented by the fiscal and monetary authorities are yielding the expected results, such as the strength of the service industries and the recovery of exports. The US stock markets also did very well, with the NASDAQ 100 up 5.4% and the New York Stock Exchange up 4.7%. The Tokyo Stock Exchange gained 3.8%, also benefiting from the uptrend. The Canadian stock market is not to be outdone, up 2.1% for the week; since the start of 2024, the Toronto Stock Exchange is up 18.1%. The only market to lose ground was the Paris Bourse, down -1.0%

Yields on 10-year government bonds are falling in three of the four top-rated countries we track. Lower yields mean higher bond prices, given the inverse relationship between yields and bond prices. The U.S. bond rate, the main benchmark rate on the market, is down -9 bps (1 basis point or bps = 0.01%) to 4.31%; note that the day after the U.S. presidential election, the U.S. bond rate reached 4.48% denoting market concerns about the impacts of policies announced by election winner Donald Trump. Canada's bond yield was down -11 bps, leaving the Canadian rate 113 bps lower than the US rate. Germany's bond yield falls -4 bps to 2.37%. Japan's bond yield jumps 6 bps to 1.01%.

On the commodities market, two of the four commodities we track are up. The rising commodities are those with the most direct impact on the cost of living. U.S. oil is up 1.3%, while corn is up 4.0%; the grain, part of whose production is used to make ethanol, a fuel blended with oil to produce gasoline, could benefit from the future administration's support for fossil fuel production. The bearish commodities are the metals in our tracking universe: copper is down -1.5% while gold loses 1.9% to end at USD 2,685.

In the crypto-currency sector, the two cryptos we track are both up sharply: bitcoin by 10.9% and ethereum by 16.8%.

As of November 8, it costs 0.4¢ CAD less to buy one US dollar than it did on November 1. The euro and yen are evolving divergently against Uncle Sam's dollar, with the single European currency down -1.1% and the Japanese currency up 0.2%.

See the detailed table by following this link:

https://iclf.ca/DL/BTTT_sommaire_marches_241108.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.