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May 2021 - A favourable context for the Canadian stock market


MAY 2021 - The backdrop remained unchanged in May: the economic recovery continued and investors' fears about inflation persisted, as evidenced by the higher gold price. The central banks persist and reiterate that the upward pressure on prices would be transitory. Conflicting views of inflation created an equilibrium that helped the bond market hold up. The price of crude oil continued to rise, supporting the Canadian dollar against many foreign currencies. In this context, the Canadian stock market had the wind in its sails.

Closing 31-05-2021 Variation vs 30-04-2021 Variation vs 31-12-2020
Interest rate in Canada (%)
Key rate 0.25 0,00 0,00
Commodities ($ US)
Oil (WTI)   $66.31 4.4% 37.1%
Gold $1,899.95 7.5% 0.7%
Currencies CAD Variation CAD Variation
EUR / CAD 0.68 0.3% 5.7%
JPY / CAD 90.74 2.1% 11.4%
USD / CAD 0.83 1.7% 5.3%

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

Canadian Market 3.6 % (MSCI Canada 31-05-21)
Propelled once again by the materials sector, the Canadian stock market led the way with a 3.6% return, as measured by the MSCI Canada Index. Consumer staples, financials and energy also contributed to this excellent result. At the other end of the spectrum, the health care, real estate and consumer discretionary sectors were the only ones to end the month in negative territory. As for the bond market, it recorded a gain of 0.7% owing to a slight decrease in medium-term sovereign yields and the current yield’s positive contribution.

American Market -1.3 % (MSCI USA 31-05-21 in CAD)
After the strong gain recorded in April, the U.S. market shifted into consolidation mode in May. As measured by the MSCI USA Index, it returned 0.5% in local currency and -1.3% in Canadian dollars. Energy, materials and financials were the sectors that contributed the most to the return. Conversely, consumer discretionary, utilities and information technology sectors detracted the most.

European Market 2.4 % (MSCI Europe 31-05-21 in CAD)
With the exception of changes in sector returns, Europe experienced a Groundhog Day. As represented by the MSCI Europe Index, its return was identical to that of the previous month. Thus the European market recorded a gain of 2.5% in local currencies and 2.4% in Canadian dollars. After ending the month of April at the top of the list, the information technology sector was the only one to suffer a loss in May. The sectors that contributed positively during the period included consumer discretionary, financials and real estate.


Asian Market -0.3 % (MSCI Asia-Pacific 31-05-21 in CAD)
As with the U.S. market, Asia’s monthly gain turned negative because of currency effects. As measured by the benchmark MSCI Asia-Pacific Index, its return in local currencies was 1.1%, but it fell to -0.3% in Canadian dollars. The loonie was especially strong against the Japanese yen. The best-performing sectors included financials, energy and consumer staples. Conversely, communications services, information technology and consumer discretionary brought up the rear.

Emerging Markets 0.5 % (MSCI Emerging Markets 31-05-21 in CAD)
Emerging markets maintained the momentum of the previous month. As measured by the MSCI Emerging Markets Index, the return was 1.3% in local currencies. In Canadian dollars, it was 0.5% because of the strength of our currency. The main contributors were energy, consumer staples and financials sectors. The Consumer discretionary, information technology and communication services sectors were the laggards.

Sources: Bank of Canada and MSCI Inc.

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