Market update. Economic gains deliver positive market returns
Markets saw modest gains through April. The Canadian dollar depreciated, increasing the gains of US and international equities in our portfolios. Oil prices swung widely throughout the month.
US market still gaining strength
The S&P 500 provided a return of 1% this month. That was driven mainly by the earnings season in the US and Europe. For instance, US market leader Apple announced $11 billion in profits and $257 billion in their cash reserves. As the US economy continues to improve, there is an increased likelihood for interest rates to go up. In this environment, high yield bonds generate income and provide a cushion against pullbacks.
Canadian job market grows, but wages not keeping pace
In Canada, the economy shows mixed signals of improvement. The job market is booming, but wage growth has slowed to its lowest level in almost two decades. The Bank of Canada left interest rates steady, saying it is unable to conclude if the economy is on a “sustainable growth path.” The low interest environment remains favourable for Canadian bonds and REITs.
Global instability offsets higher production for oil price
The price of oil remains unstable. That is mainly due to increasing reserves, US production and geopolitical instability – military conflict in particular. For instance, the price of oil rose after US President Trump ordered an airstrike on a Syrian airfield. That said, conflict may bolster the US economy as Americans stay home and consume.
Passive investing strategy enjoys increasing respect thanks to Vanguard
Vanguard’s growth is incredible, as assets under management reportedly grew to $4.2 trillion. Index investing continues to grow due to its simplicity, low cost and superior performance compared to the returns from active managers.
Our portfolios continued to benefit from broad-based diversification and delivered positive returns this month.