June 2021 - Markets continue to climb despite the rotation taking place

MARKET
REVIEWS

JUNE 2021 - In an environment that remains highly favourable, markets continued to track higher in the midst of a healthy rotation between winners and losers. As a result, the sectors that posted the best returns in May were outperformed by those that had struggled previously. Despite rising oil prices, the Canadian dollar suffered the same fate, falling against countercyclical currencies like the U.S. dollar and the Japanese yen. Gold wasn’t spared either in June, losing part of its recent gains over inflation concerns.

	Closing 30-06-2021	Variation vs 31-05-2021	Variation vs 31-12-2020
Interest rate in Canada (%)
Key rate	0.25	0,00	0,00
Commodities ($ US)
Oil (WTI)	$73.52	▲10.9%	▲52.1%
Gold	$1,763.15	▼7.2%	▼-6.6%
Currencies		CAD Variation	CAD Variation
EUR / CAD	0.68	▲0.3%	▲6.0%
JPY / CAD	89.53	▼-1.4%	▲10.0%
USD / CAD	0.81	▼-2.6%	▲2.7%

Source: Bank of Canada, Federal Reserve Bank of St-Louis, US Energy Information Administration.

Canadian Market ▲2.5 % (MSCI Canada 30-06-21)
The Canadian stock market continued to build momentum and posted a 2.5% return over the period, as measured by the MSCI Canada Index. After leading the pack for two months, materials was the worst-performing sector in June. Health care and consumer discretionary also posted disappointing returns. On a positive note, information technology, real estate and energy all performed very well. For its part, the bond market was slightly up once again this month, thanks to the positive contribution of the current yield.

American Market ▲5.3 % (MSCI USA 30-06-21 in CAD)
South of the border, the market performed in line with the Canadian market, posting a 2.8% return, as measured by the MSCI US Index. However, the currency impact was substantial, as performance increased to 5.3% when taking into account the effect of the U.S. dollar’s appreciation. From a sector perspective, information technology and consumer discretionary strongly bounced back, while materials and financials tumbled. Amid these market fluctuations, the energy sector remained one of the key contributors to performance.

European Market ▲1.2 % (MSCI Europe 30-06-21 in CAD)
The positive contribution of the health care, information technology and energy sectors helped maintain momentum on the European market, which posted a 1.6% return in local currency (1.2% in Canadian dollars), as measured by the MSCI Europe Index. Financials and consumer discretionary were among the sectors that detracted the most, despite being top contributors last month.

Asian Market ▲2.2 % (MSCI Asia-Pacific 30-06-21 in CAD)
Asia rebounded in June thanks to the contribution of the consumer discretionary, health care and information technology sectors, among others. As measured by the MSCI Asia-Pacific Index, the market posted a 1.0% return in local currencies. The Canadian dollar’s weakness against some Asian currencies such as the Japanese yen boosted the region’s performance, as it returned 2.2% when expressed in Canadian dollars. One of the best-performing sectors in May, financials detracted the most during the period.

Emerging Markets ▲2.7 % (MSCI Emerging Markets 30-06-21 in CAD)
In Emerging Markets, June’s performance in local currency was in line with last month’s, as the markets benefited from the currency impact rather than being impeded by it. As measured by the MSCI Emerging Markets Index, the market returned 0.9% in local currency, but 2.7% in Canadian dollars. Industrials, consumer discretionary and energy led the pack, while the energy and materials sectors detracted the most from performance.