Weekly Market Update July 29, 2019

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What happened last week?

With our dollar as the lone exception, it was an all-green week. Since most Canadian investors have their sharpest focus on the performance on equities, last week did not disappoint, unless you were also only focused on Canadian stocks.

  • Renewed efforts to end the U.S./China trade disputes have provided optimism that economic activity between the two nations would resume its former healthy levels.

  • The corporate earnings season, particularly in the U.S., has proved to be better-than-expected. Nearly half the firms in the S&P 500 have reported, and 77% of them have beat profit expectations, and their stock prices reflect this performance. Google led the way with a 10% price increase after their earnings announcement. https://www.barrons.com/articles/earnings-season-so-far-revenue-beats-meet-low-expectations-51564196201

  • American GDP results show that their economy was performing better than thought, but not so well to change the anticipated rate cut by the Federal Reserve. A rate cut this week will make borrowing cheaper for all firms, and it is expected to lead to economic expansion, higher profits and, ultimately, greater equity values. https://www.theglobeandmail.com/business/article-us-federal-reserve-interest-rate-cut-over-rising-trade-war-risks/

  • Last week here at home, the TSX continued its slow, steady upward climb, approximating the results of the Dow, but not nearly as impressive as the S&P 500’s new record high, and the NASDAQ staying very close to its all-time high. The TSX was helped along by the price of oil, and the consumer staples and technology sectors.

What’s ahead for this week?

  • In Canada, the results of our economic health and growth will be released through May’s Gross Domestic Product (GDP), and June’s international trade, numbers.

  • In the U.S., the long-awaited Federal Reserve interest rate decision will finally occur on Wednesday at 2 pm Eastern. Also, personal income and spending, construction spending, durable goods orders, trade balance for June, the employment report for July will be released.