Even though the month of November shed very little light on the global economic outlook, the stock markets continued to offer generous returns. Hopes for a partial resolution of the U.S.-China trade dispute contributed to the situation, as did support from the world’s leading monetary authorities.
The Canadian stock market rebounded from its October underperformance with a solid gain of 3.6% on the month, as measured by the MSCI Canada Index. Many sectors recorded strong advances, especially information technology, consumer products and energy. The bond market also added value, mainly with its current yield but also thanks to long-term bonds, which benefited from the flattening of the interest yield curve.
As for our neighbors to the south, their market welcomed positive signals from Washington and Beijing regarding an interim trade deal. In addition, the Federal Reserve (Fed) is expected to maintain an accommodative monetary policy in the absence of inflationary pressures. The U.S. stock market’s 3.8% gain in local currency, as measured by the MSCI USA Index, was due to many sectors, including information technology, health care and financials. Conversely, utilities and real estate had negative returns. A slight depreciation of the loonie against the greenback added to the gain, such that the return was a solid 4.9% in Canadian dollars.
Europe also did well in an environment devoid of major news. With the help of improved manufacturing data, it advanced 2.3% in local currencies, as measured by the MSCI Europe Index. The fluctuations of the European currencies added to this result. With the appreciation of the pound sterling, the return for the month was 2.6% in Canadian dollars. Several sectors contributed, including information technology, industrials and health care. The utilities sector lagged, however.
Despite some weaker-than-expected economic data and ongoing protests in Hong Kong, the Asian market performed positively during the month. In local currencies, the benchmark MSCI Asia Pacific Index advanced 1.3%. Health care, communication services and consumer discretionary added the most value, while utilities and real estate subtracted the most. Supported by a slight currency effect, the return for the region was 1.6% in Canadian dollars.
The performance of the emerging market countries was uneven. Fortunately, the winners included several highly weighted sectors. For example, positive contributions by consumer discretionary and communication services, which together account for almost a quarter of the index, offset losses in health care and utilities. The return in local currencies was 0.6%, as measured by the MSCI Emerging Markets Index. Currency fluctuations had a slight impact on the performance in Canadian dollars, bringing it to 0.9%.
Sources: Bank of Canada and MSCI Inc.
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