Advisors - August 2, 2022
Monthly Canada Market Wrap: July 2022
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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Canada Market Summary for July 2022
Canadian equities rebounded in July as smaller, rate-sensitive companies led the charge. The S&P/TSX 60 rose 3.9%, Canadian Large Caps added 4.6%, and Canadian Small Caps surged 8.8% higher. Around the world, the US-domiciled S&P 500 popped 9.2%, and global developed markets as measured by the MSCI EAFE index tacked on 5%.
Only Materials logged a negative July among all sectors. Info Tech’s 10% gain led all TSX sectors, while REITs came in second at 5.8%. Interestingly, Consumer Staples logged the third highest performance among sectors in a month where cyclically-sensitive companies tended to have the most standout performances.
Canadian inflation surpassed 8% for the first time since January 1981. June’s inflation number came on the heels of May’s 7.73% print, which was the first to top 7% since March 1983. Nonetheless, the Canadian unemployment rate fell to another all-time low of 4.9%. Lastly, the surging Canadian housing market continued its hot streak as the Canada New Housing Price Index increased for the 30th consecutive month.
The Canadian treasury yield curve inverted in July and went on to end the month that way. As of month’s end, the 10-Year Benchmark Bond’s yield of 2.61% was higher only than those of the 1-Month Treasury Bill. The 6-Month Treasury Bill rate was also greater than yields on both the 2-Year, 3-Year, and 5-Year Benchmark Bonds. Short-term instruments benefited from the Bank of Canada’s 100 basis point hike in July, bringing its benchmark interest rate to 2.75%. Yields on both the 1-month and 3-month treasury bills ended July above 2% for the first time since March 2008.
Canadian Sector Movement
Hot Stocks: Top 10 TSX 60 Performers of July 2022
Cameco (CCO.TO): 21.9% gain in July
Magna International (MG.TO): 15.7%
Constellation Software (CSU.TO): 14.0%
Alimentation Couche-Tard (ATD.TO): 13.9%
Saputo (SAP.TO): 12.7%
Canadian Pacific Railway (CP.TO): 12.3%
Canadian National Railway (CNR.TO): 12.0%
Brookfield Asset Management (BAM.A.TO): 11.0%
Shopify (SHOP.TO): 10.9%
FirstService (FSV.TO): 9.7%
Laggards & Losers: 10 Worst TSX 60 Performers of July 2022
Bausch Health Companies (BHC.TO): -45.2% decline in July
Barrick Gold (ABX.TO): -11.3%
Shaw Communications (SJR.B.TO): -8.7%
Agnico Eagle Mines (AEM.TO): -6.6%
Wheaton Precious Metals (WPM.TO): -5.3%
Rogers Communications (RCI.B.TO): -4.6%
Teck Resources (TECK.B.TO): -4.3%
First Quantum Minerals (FM.TO): -4.2%
Kinross Gold (K.TO): -4.1%
Suncor Energy (SU.TO): -3.8%
The Canadian unemployment rate reached another all-time low of 4.9% in June, and the Canada Ivey Employment index remained unchanged at its second-highest level 67.9. As for temporary employment, a loss of 40,000 Canadian part-time workers was recorded in June.
Production and Sales
The Canada Ivey PMI dropped nearly 10 points in June to 62.2, continuing its up-and-down pattern in 2022. Canada Retail Sales rose a healthy 2.3% in May, though Canada Real GDP was flat in the same month.
Prices of new Canadian homes increased 0.16% in June. June 2022 marked the 30th consecutive month in which the Canada New Housing Price Index has risen, but at the smallest pace since June 2020.
Consumers and Inflation
Canadian Inflation clocked in at 8.13% in June, topping 8% for the first time since January 1983. June’s print also marks the twelfth consecutive increase to the inflation rate. Canada’s Consumer Price Index rose by 0.59% as well.
The price of gold was C$2,246.70 per ounce as of July 29th, a monthly decline of 4.1%. As a result, the iShares S&P/TSX Global Gold ETF (XGD.TO) dropped 9.0% in June and is now down 18.3% year to date.
The spot price of WTI crude was under $100 USD per barrel as of July 25th, while the price of Brent in USD declined 9.7% on the month. Retail Sales among Canadian Gasoline Stations reached an all-time high of C$7.754 billion in May, up 54.3% from a year ago.
The “crypto winter” of 2022 somewhat melted away in July as investors increased their risk appetite. Bitcoin’s price increased 17.6% in July to settle at $23,653 USD as of July 31st. Binance Coin shot 31% higher to $287.36 USD at month’s end. The biggest winner among major cryptocurrencies was Ethereum, whose 54.4% surge in July brought its price to just shy of $1,700 USD. Year to date, Binance Coin is 44.6% lower, Bitcoin is down 49.9%, and Ethereum is 54.3% in the red.
Featured Market & Advisor News
Harness Volatility & Create Opportunity (YCharts)
Economic Update — Reviewing Q2 2022 (YCharts)
Fixed Income Performance
Canadian Treasury Yield Curve
10 Year Treasury Rate: 2.67%
Have a great August! 📈
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