IAIC Market Update - May 10, 2021

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

North American equities did well last week except for the NASDAQ index which experienced a rare, negative reversal. 

• The NASDAQ’s technology firms, especially the largest like Facebook, Amazon, Alphabet (Google) and Microsoft, have not delivered the performance lately that has allowed the index to outperform others in the past year.
• The week also ended with pessimistic and disappointing employment news. Renewed pandemic restrictions for Canadians were implemented in April leading to 207,000 job loses, about 35% more than expected. 
• In the U.S. 266,000 new jobs were added when about 1 million additional jobs were expected. Instead of increasing the number of new jobs from March’s result of 770,000, employment growth fell by about 200,000 jobs. About 7 million less jobs exist today than before the pandemic began. 
• The unemployment rate in the U.S. stands at 6.1% and 8.1% in Canada. The rates do not seem as discouraging as expected, however, as these indicators are lower because labour force participation has fallen. 
• About two-thirds of North American Gross Domestic Product (GDP) is comprised of consumer spending. The purchase of products and services by individuals and families is the largest contributor to GDP. Consumers without income (i.e. jobs) will exhaust their savings and stall economic recovery. Monitoring job data domestically and internationally is critical to understanding progress against the pandemic.
  

What’s ahead for this week?

• In Canada, the Bank of Canada Governor, Tiff Maklem, will hold a webcast where he will review the central banks actions and lay groundwork for upcoming measures. March’s industrial price index, manufacturing sales and new orders and wholesale trade information will be released.
• In the U.S., inflation figures for April will be released through the Consumer Price Index (CPI). Budget deficit figures, retail sales, import and export price indices, industrial production and business inventories are also scheduled for release.