Advisors - May 3, 2021
Monthly Canada Market Wrap: April 2021
Welcome back to the Canadian Monthly Market Wrap from YCharts! Here, we break down the most important market trends for Canada-based advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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Last month, coronavirus cases surged in Canada. Though the country is experiencing elevated numbers of cases per day, the curve has plateaued, and deaths per day remain low. Pandemic fatigue and several new variants have taken a larger — and growing — toll on the rest of the world.
Also this month, investors digested a grand buffet worth of earnings reports, as the majority of S&P 500 constituents updated shareholders on their Q1 2021 performances.
The second quarter of 2021 is in full swing, with these key developments occurring in April:
• Off the YCharts! Crypto: Come-up + Correction = Correlation
• Major Index Returns: April was, in fact, kind to stocks
• Sector Movement: 5 out of 7 Winners in April
• Hot Stocks of the Month: Shaw Communications, Retail Keep It Going
• Laggards & Losers: Cannabis Burns Out; Grocery Stores, Railroads Skid
• Financial Market & Advisor News
• Economic Data: Housing Goes Through the Roof
Off the YCharts! Crypto: Come-up + Correction = Correlation
That was good alliteration, wasn’t it?
April was another breakout month for several crypto assets, including Bitcoin, Ethereum, Litecoin, and Cardano. But prices corrected just as fast. As market leader Bitcoin goes, so goes the rest of crypto, based on the following price correlations:
Major Index Returns: April was, in fact, kind to stocks
The US stock index S&P 500 was April’s market leader, logging a 5.4% gain. In Canada, the S&P/TSX 60 rose 2.2%. Internationally, Developed Markets were up 3.1%, while Emerging Markets added 2.5%. The Global Aggregate Bond Index broke a three-month losing streak and rose 1.3%.
Sector Movement: 5 out of 7 Winners in April
Materials gave back some gains in the last two weeks of April but still led all TSX sectors to end the month up 5.3%. Canada REITs had a nice month as well, right behind Materials with a 4.6% gain. Two sectors finished slightly in the red: Consumer Staples and Utilities, down 0.5% and 0.8%, respectively.
Hot Stocks of the Month: Ten Best Performers
Welcome back to the leaders list, Shaw Communications (SJR.B.TO)! After surging 47.5% in March on takeover news, shares were up another 8.9% after solid earnings, unveiling of high-speed internet product Shaw Gig WiFi, and a reaffirmation of the planned merger with Rogers Communications (RCI.B.TO). It was another healthy month through the eyes of consumers, enough to send Gildan Activewear (GIL.TO) and retail giant Canadian Tire Corp (CTC.A.TO) higher.
First Quantum Minerals (FM.TO) was the top TSX stock of the month, with Imperial Oil (IMO.TO), Franco-Nevada (FNV.TO), Power Corporation of Canada (POW.TO), Teck Resources (TECK.B.TO), Waste Connections (WCN.TO), and Kirkland Lake Gold (KL.TO) also making the cut for April’s ten best performers.
Laggards & Losers: Ten Worst Performers
Canopy Growth (WEED.TO) found itself back on the bottom ten list for the second straight month. This time, the company was April’s biggest TSX laggard as investors lost patience with its inability to tighten operations and turn a profit. April was a down month for Canadian grocery stores, as shares of Loblaw Companies (L.TO), George Weston (WN.TO), and Metro (MRU.TO) were all down. Commentary from BMO Capital Markets provided concern that underperforming Loblaw Companies may withdraw 2021 EPS guidance in the face of several headwinds, including government restrictions on shopper capacity. These headwinds could potentially affect Loblaw’s peers. Railroad stocks Canadian National Railway (CNR.TO) and Canadian Pacific Railway (CP.TO) took the #2 and #3 laggard spots on news that both companies were in a bidding war for acquisition target Kansas City Southern (KSU).
Financial Market & Advisor News
Your Complete Guide to Sector Rotation (YCharts)
ETFs see record inflows of $250 billion in first quarter (InvestmentNews)
Wall Street on Tax Plan: ‘It Will Incentivize Selling This Year’ (WealthManagement.com)
Economic Data: Housing Goes Through the Roof
Unemployment: Despite many provinces in lockdown, March’s Canadian unemployment rate clocked in at a pandemic era low of 7.5%. 817,800 Canadian males were jobless in February, while 698,900 females found themselves out of work. Canada Part-time Employment rose to 3.44M, adding 127,000 part-time workers from February.
Manufacturing: The Canada Ivey PMI roared to 72.9 in March, 12.9 points higher than February’s reading and a three-year high.
Have a great May! 📈
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