OCTOBER 2021 - Concerns about the Delta variant and its impact on the stock markets proved to be short-lived. October saw a significant rebound, particularly on the North American stock exchanges. Meanwhile, the price of oil continued to rise, causing the loonie to appreciate against most foreign currencies. Amid signs that inflation is more persistent than expected, central banks brought forward their monetary tightening schedule, contributing to a rise in short- and medium-term interest rates.
|Closing 31-10-2021||Variation vs 30-09-2021||Variation vs 31-12-2020|
|Interest rate in Canada (%)|
|Commodities ($ US)|
|Currencies||CAD Variation||CAD Variation|
|EUR / CAD||0.70||▲3.2%||▲8.5%|
|JPY / CAD||92.00||▲4.7%||▲12.8%|
|USD / CAD||0.81||▲2.8%||▲2.8%|
Sources: Bank of Canada, Federal Reserve Bank of St-Louis, US Energy Information Administration. *Last update 2021-10-25.
Canadian Market ▲5.4 % (MSCI Canada 31-10-21)
The Canadian stock market did very well in October, with most sectors contributing to its performance. The best performers included industrials, energy and materials. Conversely, health care, consumer staples and communication services struggled the most. As measured by the MSCI Canada Index, the return was 5.4% for the period. In contrast, the bond market subtracted value as a result of a flattening of the yield curve. The yield on bonds maturing in 30 years or more was stable while the yields on shorter-term securities increased.
American Market ▲4.7 % (MSCI USA 31-10-21 in CAD)
After a disappointing September, the U.S. market regained its leadership in October with contributions from all sectors. As measured by the MSCI USA Index, it returned 7.0% in local currency. Consumer discretionary, energy and information technology were the sectors that contributed the most to the return. Even so, the strength of our currency offset some of the gain, reducing it to 4.7% in Canadian dollars.
European Market ▲2.3 % (MSCI Europe 31-10-21 in CAD)
Across the pond, the positive performance was also well distributed. Communication services was the only sector to record a negative return. Those sectors that added the most value were utilities, consumer discretionary and financials. As measured by the MSCI Europe Index, the return was 3.8% in local currencies. Even so, the exchange rate effects between the loonie and the main European currencies reduced the gain to 2.3% in Canadian dollars.
Asian Market ▼2.1 % (MSCI Asia-Pacific 31-10-21 in CAD)
The rebound was less convincing on other markets, especially in Asia, where most of the sectors remained in the red. That being said, positive contributions by consumer discretionary, communications services and financials allowed the region to end the month in positive territory. As measured by the benchmark MSCI Asia Pacific Index, the return was 0.2% in local currencies. Again, currency fluctuations affected the result, such that the return in Canadian dollars was -2.1%. The weakest sectors were health care, utilities and industrials.
Emerging Markets ▼1.2 % (MSCI Emerging Markets 31-10-21 in CAD)
Like the Asian market, emerging markets did better than in September but nothing more. The positive contributions were limited to consumer discretionary, communications services and financials. Conversely, health care, real estate and utilities subtracted the most value. The return in local currencies was 0.9%, as measured by the MSCI Emerging Markets Index. Owing to the appreciation of our currency, the return fell to -1.2% in Canadian dollars.
Sources: Bank of Canada and MSCI Inc.
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