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Advisors - July 6, 2021

Monthly Canada Market Wrap: June 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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Whether you consider it “halfway to heaven” or “halfway to h-e-double-hockey-sticks” (as the Leafs, Oilers and Jets are probably thinking right now), 2021 is halfway done. So far, it’s been a positive year for markets as the S&P/TSX 60 leads North America with an 18.6% gain. The S&P 500 has risen 15.3% while the NASDAQ is closely behind, up 13%. Abroad, International Developed Markets are up 9.2%, while Emerging Markets have tacked on 7.6%.

TSX, S&P 500, NASDAQ 2021 YTD Returns (January to June 2021)

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As for individual sectors, six of the seven SPDR TSX Sector ETFs are higher in the first half of 2021. Energy is the clear-cut leader with its 56.2% rise, while Financials, REITs, and Info Tech are all up double digits thus far. Materials is the only down sector, though lower by just 0.4%:

TSX 2021 YTD Sector Returns (January to June 2021)

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Before cruising on to the second half of the year, we’ll take a quick pit stop to look at these key developments in June:

Off the YCharts! Housing Gets Hot

Major Index Returns: U.S, Canada, and Emerging Markets Higher

Sector Movement: 6 out of 7 Winners in June

Hot Stocks of the Month: Info Tech, Energy Power Returns

Laggards & Losers: Golden Hour Is Over

Economic Data: Inflation Sets New High, Manufacturing Rebounds

Off the YCharts! Housing Gets Hot

The talk of the town—country, rather—has been Canada’s incredibly active housing market. Turns out numbers don’t lie: Canada Housing Starts have been on the rise since mid-2020, and both sales of Canada Lumber, Millwork, Hardware, and Building Supplies and the Canada New Housing Price Index are sitting at all time highs.

10-year look at Canada Housing Starts, Canada Lumber, Millwork, Hardware, and Building Supplies, Canada New Housing Price Index, and Canada Bank Rate from July 2011 through June 2021

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Interestingly enough, the Bank of Canada hasn’t increased its benchmark rate to cool down the housing market. That decision has also been also influenced by the economic impacts of lockdowns and business closures over the past 15 months, but given nearly half of Canadians support raising rates to combat the rocketing housing market, investors will be watching for increases to the Canada Bank Rate.

Major Index Returns: U.S, Canada, and Emerging Markets Higher

TSX Composite 60, S&P 500 Major Index Returns for June 2021

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North American equities had a positive June, along with emerging markets. The S&P 500 rose 2.3% and the S&P/TSX 60 added 1.9%, while MSCI’s EM index tacked on 1.4%. International Developed Markets finished the month down 1.4%, and the Global Aggregate Bond Index slipped 0.7%.

Sector Movement: 6 out of 7 Winners in June

S&P/TSX Capped ETF Sector Movement, June 2021

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After slipping 1.3% last month, Info Tech led all sectors with a 14.2% surge in June. Energy came in 2nd place with a sizable 9% gain. REITs, Utilities, Financials, and Consumer Staples were all up modestly in June, with the only laggard being Materials, sinking a hefty 5.9%.

Hot Stocks of the Month: Info Tech, Energy Power Returns

Top ten performing TSX stocks for June 2021

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Shares of Shopify (SHOP.TO) were up 22.5% in June, representing nearly all of its year-to-date gains, as the Canada-based e-commerce giant bought about $1 billion worth of pre-IPO shares in payment processor Stripe. Wells Fargo also noted eWallets are expected to account for over half of e-commerce sales by 2023, which could poise Stripe and Shopify for bright futures. Oil & gas companies Cenovus Energy (CVE.TO), Inter Pipeline (IPL.TO), Enbridge (ENB.TO), Canadian Natural Resources (CNQ.TO), and Suncor Energy (SU.TO) were all higher in June on the back of rising oil prices, with WTI Crude shooting past $70 per barrel.

The respective 10.7% and 9.4% returns in technology companies Open Text (OTEX.TO) and Constellation Software (CSU.TO) helped propel the Info Tech sector in June, with Dollarama (DOL.TO) and Rogers Communications (RCI.B.TO) also making the cut for June’s ten best performers.

Laggards & Losers: Golden Hour Is Over

Worst performing TSX stocks, June 2021

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It was certainly “golden hour” last month as four gold companies cracked May’s top ten, but falling gold prices caused the sun to set on Kinross Gold (K.TO), Agnico Eagle Mines (AEM.TO), Barrick Gold (ABX.TO), Kirkland Lake Gold (KL.TO), and Wheaton Precious Metals (WPM.TO) in June. Consumer stocks also had a rough June, as shares of Saputo (SAP.TO) were down 10.4%; brick and mortar giants Restaurant Brands International (QSR.TO) and Canadian Tire Corp (CTC.A.TO) lost about 4% each.

Integrated oil & gas producer Imperial Oil (IMO.TO) and drug manufacturer Bausch Health Companies (BHC.TO) round out June’s ten worst performers.

Financial Market & Advisor News

Record-High Number of S&P 500 Companies Issuing Positive EPS and Sales Guidance for Q2 (FactSet)

5 Ways to Protect Your Portfolio Against Inflation (YCharts)

Canada among bubbly housing markets flashing 2008 warnings (BNN)

BlackRock Warns U.S. Stocks at Risk From Higher Tax, Peak Growth (WealthManagement.com)

Today’s Wholesaler — An Asset, Guide & Consultant to Advisors (YCharts)

Canada posts $1.4B trade deficit in May as imports rose and exports fell (CTV News)

Economic Data: Inflation Sets New High, Manufacturing Rebounds

Unemployment: May’s Canadian unemployment rate ticked up to 8.2%, retaking its February level but still well below the pandemic-era high of 13.7% last May. 873,500 Canadian males were jobless in May, while 778,800 females found themselves out of work. Canada Part-time Employment fell to 3.31M in May, a net loss of 55,000 part-time workers from April.

HousingCanada Housing Starts rebounded in May to 21,971, a month-over-month increase of 6.5%. The Canada New Housing Price Index rose 1.4% in May as the Canadian housing market continues to stay hot.

Consumers: The Canada Consumer Price Index rose 0.4% in May, while the Canada Inflation Rate checked in at 3.6%, beating last month’s high of 3.4% and setting another ten year high.

Manufacturing: After plummeting over 12 points in April, the Canada Ivey PMI rebounded 4.1 points to 64.7 in May, up 65% from where the index was a year ago.


Have a great July! 📈

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