SEPTEMBER 2021 - As the world’s stock market rally took a break, the price of crude oil began to rise once again. This contrast underscores the high valuations that some markets, notably the United States, have reached since the start of the recovery, but also the fact that economic growth will continue in the coming quarters. The higher oil price helped make the energy sector the number one contributor to performance on all the markets and boosted the loonie against a number of foreign currencies. In response to the economy’s direction, the yield curve steepened significantly.
|Closing 30-09-2021||Variation vs 31-08-2021||Variation vs 31-12-2020|
|Interest rate in Canada (%)|
|Commodities ($ US)|
|Currencies||CAD Variation||CAD Variation|
|EUR / CAD||0.68||▲0.7%||▲5.3%|
|JPY / CAD||87.80||▲0.8%||▲8.1%|
|USD / CAD||0.78||▼1.0%||▼0.1%|
Sources: Bank of Canada, Federal Reserve Bank of St-Louis, US Energy Information Administration. Last update 2021-09-28.
Canadian Market ▼2.3 % (MSCI Canada 30-09-21)
Helped by the significant weight of its energy sector, the Canadian stock market declined less than Europe and the United States. The sectors hit hardest included information technology, health care and materials. As measured by the MSCI Canada Index, the return was -2.3% in September. On the bond market, rising yields across the curve contributed to the negative return.
American Market ▼4.5 % (MSCI USA 30-09-21 in CAD)
After dominating for several months, the U.S. market found itself at the back of the pack in September. Weighed down by all sectors, with the exception of energy, it returned -4.7% in local currency, as measured by the MSCI USA Index. Materials, communication services and real estate contributed the most to the negative result. The exchange rate fluctuation had little impact; in Canadian currency, the return was -4.5%.
European Market ▼4.5 % (MSCI Europe 30-09-21 in CAD)
In Europe, the energy sector did very well, and the financial sector was also positive. All the other sectors recorded a loss, particularly utilities, real estate and materials. As measured by the MSCI Europe Index, the European market returned -3.0% in local currencies. The loonie’s strength against the euro, the pound sterling and the Swiss franc increased the loss to -4.5% in Canadian dollars.
Asian Market ▼1.5 % (MSCI Asia-Pacific 30-09-21 in CAD)
Unlike the other markets, Asia saw a positive contribution from most sectors of its economy. Led by energy, financials and utilities, it returned -0.8% in local currencies as measured by the benchmark MSCI Asia-Pacific Index. Even so, currency fluctuations caused the return to fall to -1.5% in Canadian dollars. The weakest sectors included materials, consumer discretionary and information technology.
Emerging Markets ▼3.7 % (MSCI Emerging Markets 30-09-21 in CAD)
Unfortunately, emerging markets were not able to go it alone. Despite contributions by energy, utilities and real estate, they ended the month with a -2.8% return in local currencies, as measured by the MSCI Emerging Markets Index. Consumer discretionary, materials and information technology subtracted the most value. With the loonie’s strength against all the emerging currencies, the September return was -3.7% for Canadian investors.
Sources: Bank of Canada and MSCI Inc.
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