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8 mins
Stock markets and the economy

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January 2023 - A wind of optimism lifts the markets at the start of the year

January 2023 -The global stock markets started the year strongly, lifted by optimism about easing inflationary pressures and expectations of an end to the interest rate hikes. In Canada, for example, the annual inflation rate eased from 8.1% in June to 6.3% in December. Even though inflation remained well above the Bank of Canada’s 2.0% target, the markets welcomed the news. At the end of January, the Bank of Canada raised rates by 25 basis points, bringing its key rate to 4.5%. At the same time, it announced a “conditional pause” on its hikes in order to assess the economic situation and the impact of the cumulative increases. In the United States and Europe, the situation was similar. The markets rose on hopes that the central banks would reduce their aggressive rate hikes, while Asia and emerging markets benefited greatly from the rapid reopening of the Chinese economy.

Closing 31-01-2023Variation vs 31-12-2022Variation vs 31-12-2022
Interest rate in Canada (%)
Interest rate in Canada (%)
Key rate
Key rate4.500.250.25
Commodities ($ US)
Commodities ($ US)
Oil (WTI)
Oil (WTI)$79.12-1.7%-1.7%
Gold$1 944.10+7.3%+7.3%
CurrenciesCAD VariationCAD Variation
EUR / CAD1.45+0.3%+0.3%
JPY / CAD0.01-0.1%-0.1%
USD / CAD1.34-1.4%-1.4%


7.4% (S&P/TSX Composite 31-01-2023)

The Canadian stock market returned 7.4% in January, as measured by the S&P/TSX Composite Index. All sectors, without exception, recorded gains. Financials, Materials and Information Technology contributed the most to the return.

The Canadian bond market also benefited from expectations that the Bank of Canada’s tightening cycle could slow. The FTSE Canada Universe Bond Index returned 3.1% on the month.


4.7% (SP 500 31-01-2023 in CAD)

After an unusually difficult 2022, the U.S. market also advanced in January. There too, the inflation data were welcomed by investors who were eagerly awaiting the U.S. Federal Reserve’s announcements. The S&P 500 Index ended the month with a gain of 6.3% in U.S. dollars. The appreciation of our currency slightly reduced the return to 4.7% for Canadian investors. Despite layoff announcements after years of massive hiring, U.S. Big Tech companies outperformed the broad market. The Information Technology, Consumer Discretionary and Communication Services sectors contributed the most to the return. In contrast, Health Care, Consumer Discretionary and Utilities ended the month with losses.


7.0% (MSCI Europe 31-01-2023 in CAD)

Inflation remained at very high levels in Europe, but lower energy prices, adequate natural gas reserves and unexpectedly mild weather allowed the market to rebound in January. The benchmark MSCI Europe Index ended the period with a return of 7.0%, in local currencies and Canadian dollars alike, with strong performances by Financials, Consumer Discretionary and Industrials.


6.2% (MSCI Asia-Pacific 31-01-2023 in CAD)

he Asian market benefited from the end of China’s zero-Covid policy and widespread market optimism. The MSCI All Country Asia Pacific Index ended the month with a return of 6.2% in local currencies. The result in Canadian dollars was also 6.2%. In absolute terms, Information Technology, Communication Services and Materials recorded the largest gains. Only the utilities sector ended the month with a loss.


6.3% (MSCI Emerging Markets 31-01-2023 in CAD)

China’s turnaround also lifted emerging markets, with the MSCI Emerging Markets Index returning 6.6% in local currencies and 6.3% in Canadian dollars. Not surprisingly, China contributed the most to this result at the regional level, followed by Taiwan and South Korea. All sectors except Utilities posted gains on the month, led by Information Technology, Communication Services and Consumer Discretionary.

Reading in progress:January 2023 - A wind of optimism lifts the markets at the start of the year


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