On the one hand, a strong labour market, combined with stagnant core inflation and better-than-expected corporate earnings, bolstered the case for another rate hike by the U.S. Federal Reserve. On the other hand, slower growth heightened the fears of a recession.
Update on the regional bank crisis in the United States
At the end of the month, the first-quarter results announced by the U.S. regional bank First Republic Bank reignited concerns about the U.S. banking sector. The report showed unexpectedly large deposit outflows, causing the bank’s share price to plummet. The U.S. bank JPMorgan Chase & Co. ultimately agreed to acquire First Republic Bank in a government-led transaction, after financial regulators took control of it.
|Interest rate in Canada (%)|
|Commodities ($ US)|
|EUR / CAD||1.50||+1.7%||+3.4%|
|JPY / CAD||0.01||-2.1%||-3.0%|
|USD / CAD||1.36||+0.3%*||+0.3%*|
Sources : Banque du Canada, Fundata
CANADIAN MARKET2.9% (S&P/TSX Composite 30-04-2023)
The S&P/TSX Composite Index advanced 2.9% during the month. All sectors, without exception, recorded gains during the period. Financials, Energy and Materials were the main contributors. The Canadian bond market also had a positive return for the period, with the FTSE Canada Universal Bond Index ending the month up 1.0%.
AMERICAN MARKET1.8% (S&P 500 30-04-2023 in CAD)
On the strength of corporate earnings that beat expectations, U.S. stocks ended the month up 1.6% in local currency, as measured by the S&P 500 Index. Most of the results looked resilient, particularly those of the U.S. Big Tech stocks, despite uncertainty about the future of the economy.
Health care, Financials and Communication Services were the main contributors, while Industrials and Consumer Discretionary detracted from the return the most. The currency effect had a negligible impact on the return to Canadian investors, which was 1.8% for the month.
EUROPEAN MARKET4.5% (MSCI Europe 30-04-2023 en CAD)
The European market continued its momentum, closing the month with another gain. The MSCI Europe Index advanced 2.6% in local currencies. The Canadian dollar’s weakness against the euro and the pound sterling boosted the return to 4.5% in Canadian currency. Health care contributed the most to the return, followed closely by Financials and Consumer Staples. Only Information Technology had a negative return.
ASIAN MARKET-0.8% (MSCI Asie-Pacifique 30-04-2023 en CAD)
The results were more mixed for the Asian market. The MSCI All Country Asia Pacific Index ended the month with a return of 0.1% in local currencies and -0.8% in Canadian dollars. As on the Western markets, Financials rebounded from the March rout and contributed the most to the return. Even so, negative returns for Communication Services, Information Technology and Consumer Discretionary dragged the index down. From the regional standpoint, India, Japan and Indonesia were the main contributors, while China and Taiwan detracted from the return.
EMERGING MARKETS-0.9% (MSCI Marchés Émergents 30-04-2023 en CAD)
The situation was similar in emerging markets, with the MSCI Emerging Markets Index ending the month with a return of -0.7% in local currencies and -0.9% in Canadian dollars. The decline was due mainly to weak performances by the stock markets in China and Taiwan, despite relatively solid performances by India, Saudi Arabia and Brazil. Even though China has reopened its economy and ended the pandemic-related restrictions, weaknesses in the global economy weighed on its manufacturing industry.