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September 2022 - The increasing risk of a recession hits the markets again


marchésSeptember 2022 - As inflation continued to accelerate in September, the threat of a global recession was the main concern of investors, who are becoming more wary. As a result, the global stock markets were hit hard by the unprecedented global effort to fight inflation, falling to their lowest levels in almost two years. Many central banks raised their rates during the month, including the Bank of Canada, the U.S. Federal Reserve, the European Central Bank and the Bank of England. Serving as a safe haven, the U.S. dollar climbed to record highs against other major currencies. At the same time, the euro and the pound sterling reached historic lows. Crude oil and other commodities also fell amid growing concerns about a global economic slowdown.

Closing 30-09-2022 Variation vs 31-08-2022 Variation vs 31-12-2021
Interest rate in Canada (%)
Key rate 3.25 0.75 3.00
Commodities ($ US)
Oil (WTI) $79.49 -10.6%▼  5.5%
Gold $1,671.80 -2.6%▼  -7.4%▼ 
Currencies CAD Variation CAD Variation
CAD /EUR 0.75 -1.7%
CAD /JPY 105.49 -0.3%▼ 
CAD /USD 0.73 -4.4%▼ 

Sources: Bank of Canada, Fundata, US Energy Information Administration.
Currencies as of September 29.

CANADIAN MARKET -3.9%▼ (MSCI Canada 30-09-2022)
The MSCI Canada Index lost 3.9% in September. Even though the Canadian market failed to avoid a widespread selloff during the month, it managed to outperform its peers. Only the Materials sector contributed positively to the return, while Energy and Utilities subtracted the most.

U.S. MARKET -4.8%▼ (MSCI USA 30-09-2022 in CAD)
The deteriorating economic outlook pushed the U.S. market to a new low in September, as many companies, including some Big Tech companies, cut their growth expectations. The MSCI USA Index ended the month down 9.3% in local currency. All sectors retreated with the exception of Health Care. The strength of the U.S. dollar, which serves as a safe haven, reduced the loss to 4.8% in Canadian currency.

EUROPEAN MARKET -4.2%▼ (MSCI Europe 30-09-2022 in CAD)
In Europe, the U.K. market was the center of attention; it was hit hard after the new government unveiled a much-criticized budget. As already noted, the pound sterling plunged to a record low as a result. The European market returned -6.0% in local currencies during the period, as represented by the MSCI Europe Index. In Canadian dollars, the index was down 4.2%. All sectors, without exception, ended the month lower, with Real Estate and Communication Services posting the weakest returns.

ASIAN MARKET -7.5%▼ (MSCI Asia-Pacific 30-09-2022 in CAD)
It was the same story on the Asian markets, which also sold off. The MSCI All Country Asia Pacific Index closed the month with a return of -8.7% in local currencies and -7.5% in Canadian dollars. China and Taiwan detracted from the performance the most. All sectors contributed to the losses, including Information Technology, Consumer Discretionary and Communication Services.

EMERGING MARKETS -7.3%▼ (MSCI Emerging Markets 31-08-2022 in CAD)
The MSCI Emerging Market Index also suffered in September, driven by the fall in Chinese equities amid concerns about China’s slowing growth. The index ended the month with a return of -9.3% in local currencies and -7.3% in Canadian dollars. Information Technology, Consumer Discretionary and Communication Services saw the largest losses. Even so, some countries contributed positively to the performance, such as Mexico, Indonesia and Brazil.

Sources: Bank of Canada and MSCI Inc.
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