Signs of accelerating growth continued, particularly the rising price of oil, which was up more than 7%. As a result, the Canadian dollar appreciated against the major foreign currencies. Even so, this additional gain of the oil price failed to boost the energy sector, which found itself at the back of the pack in many places around the world.
The Canadian stock market advanced once again, returning 2.3%, as measured by the MSCI Canada Index. Even though most of the sectors closed the month in positive territory, the best performers were materials, real estate and consumer discretionary. In contrast, health care, industrials and utilities were the only sectors to subtract value. The bond market barely budged, with the current yield being offset by a slight decline in long-term sovereign bonds.
The Biden administration’s generous stimulus plan is bearing fruit. South of the border, all sectors again recorded a positive U.S.-dollar return during the period. As measured by the MSCI USA Index, the market advanced 5.4% in local currency and 3.2% in Canadian dollars. Real estate, communication services and financials sectors contributed the most to the return. Energy, consumer staples and industrials sectors were among the worst performers.
Currency fluctuations barely affected the European market’s return. As represented by the MSCI Europe Index, it was 2.5% in local currencies and 2.4% in Canadian dollars. The Energy sector was the only one to record a loss. Conversely, the most meritorious performers were information technology, real estate and consumer staples.
Signalling that the markets are propelled largely by stimulus programs, the results were more modest in regions where governments were less generous. As a result, the Asian market returned 0.5% in local currencies according to the benchmark MSCI Asia Pacific Index. In Canadian dollars, the return was -0.8%. Utilities, consumer discretionary and consumer staples were the sectors that detracted from the return the most. Materials, information technology and communication services sectors limited the damage, however.
Despite more modest results, emerging markets turned the tide in comparison with the previous month. As measured by the MSCI Emerging Markets Index, they returned 1.6% in local currencies. The loonie’s strength reduced the return to 0.3% for Canadian investors. Among the sectors that contributed positively included materials, health care and industrials. At the other end of the performance spectrum were real estate, energy and utilities.
Sources: Bank of Canada and MSCI Inc.
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