World Markets

Canadian Market Update: Volumes Elevated

WHAT HAPPENED:

  • The TSX lost 1.6%, unable to hold the technically significant 15,600 level; outperformed a 2% loss in the S&P500.
  • Volumes were elevated and Small Caps underperformed though losses were broad-based.
  • CA Tech continues to surge (heavy ETF support), a 1.2% gain took the sector to a ~12% YTD gain. Defensive Staples and Utilities also gained.
  • Losses in Energy, Materials and Financials were the greatest weights.
  • Oil lost 3.6% (shorts continue to decrease against it),precious metals were also lower – mostly on US$ strength.
  • C$ ended down by 1.9% (asset managers continue to pull back long exposure), sitting at $0.77 support.
  • CA ETF Flows – broader market ETF’s saw outflows,TSX60 ETF saw its largest outflow since the end of 2017, bond ETFs benefitting, Energy ETF saw an 8th consec. week of outflows.
  • U.S. ETF FlowsTech and bond ETFs the only ones to see positive flows.

WHAT’S TO COME:

  • Bank of Canada – announcing on Wednesday, no change expected.
  • Technicals – further weakness could push the TSX down to 15,200 and then 15,000 supports.
  • >2/3 of the TSX is in correction territory, 1/3 is in a bear market.
  • Economic calendar – employment report on Friday headlining; likewise, the U.S. nonfarm payrolls data is also out on Friday.
  • Earnings – earnings season slowing w/ smaller names mostly coming up, the most notable being – DSG, LNR, TOY, FNV.
  • # of CA proxy contests consistent in 2017, but it was the first time since 2014 that dissidents won more contests than management: https://www.irmagazine.com/articles/activism/29470/canadian-dissident-investors-had-successful-2017-study-says

CA ETF flow action has been driving YTD performance domestically:


Nasdaq Advisory Services Canadian Team Prab Sagoo
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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