June 2020 - Market momentum continues

Market Reviews - Monthly Review

Despite numerous antiracism protests around the world and the proliferation of the COVID-19 virus in the United States, the global stock markets managed to continue their recovery during the month. Thanks to a steadily rising oil price, our loonie also maintained its upward trajectory. With interest rates firmly anchored at low levels, the price of gold bullion built on its recent gains.

CANADIAN MARKET

The Canadian stock market has performed strongly since the oil price began to rebound. As measured by the MSCI Canada Index, it posted a respectable gain of 2.2% in June. From the sector standpoint, Information Technology did very well, and Real Estate and Financials made a strong comeback. On the other hand, some sectors struggled, notably Health Care, Energy and Communication Services. Interest rate fluctuations contributed to the performance of bonds for all categories of issuers. The narrowing of credit spreads benefited corporate bonds and asset-backed securities, while the decline in long-term rates was favorable to sovereign bonds.

U.S. MARKET

The United States is the epicentre of racial tensions and is also seeing rapid increases in the number of COVID-19 cases, yet its stock market maintained its momentum. According to the MSCI USA Index, the U.S. market was up 2.3% in local currency. Supported by rising oil prices, our loonie continued its upward trend against the greenback, such that the return was reduced to 0.8% in Canadian dollars. Several sectors lagged during the month, including Utilities and Health Care. However, the market received a boost from Information Technology and Consumer Discretionary.

EUROPEAN MARKET

Europe also did very well during the month. As represented by the MSCI Europe Index, the European market returned 3.3% in local currencies. Fluctuations in European currencies had a slight impact on the return reducing it to 2.6% in Canadian dollars. In June, all sectors except Health Care made a positive contribution.

ASIAN MARKET

Asia outperformed the developed countries’ average return in June. As measured by the benchmark MSCI Asia Pacific Index, the region advanced 4.3% in local currency terms. The loonie’s strength against some of the currencies in the index, such as the Japanese yen, reduced the gain to 3.6% in Canadian dollars, however. Information Technology and Communication Services contributed the most to the performance.

EMERGING MARKETS

Emerging countries recorded the best return in the month of June. As measured by the MSCI Emerging Markets Index, they advanced 6.7% in local currencies. Currency fluctuations slightly detracted from performance, lowering it to 5.8% in Canadian dollars. Health Care was once again the strongest performer, while Utilities was the only sector to subtract value.

Sources: Bank of Canada and MSCI Inc.

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