Market Insights

Market Update. US equity markets light up to record highs before the 4th of July

July 8, 2019


Market Update. US equity markets light up to record highs before the 4th of July

Market Insights

July equity markets have started with a bang. On the eve of the US Independence Day, the Fourth of July holiday, all major US market indices closed at new record highs, including the Dow, the S&P 500 and the NASDAQ.

The high follows hot on a tremendous global equity rally in June. After a down May, the US, Canadian, and global equity markets (as measured by the MSCI World Index) completely reversed course. 

Stalled China-US trade talks finally restarted at the end of June following the G20 meeting between President Trump and President Xi, fuelling investor optimism that we could see a trade deal before the end of the year.

Here’s what else you need to know:

  • All WealthBar portfolios closed out the month of June higher as global equity markets rallied from their May 31, 2019 bottoms.
  • There is bullish optimism for stocks on the expectation that the US Federal Reserve could cut interest rates one to two times before the end of 2019. 
  • On July 2, 2019 European Union policymakers nominated Christine Lagarde to head up the European Central Bank as president. She is currently the managing director of the International Monetary Fund and many expect she would favour low interest rates when it comes to monetary policy. European equity markets reacted very positively to her nomination.  
  • At the recent G20 meeting, both President Trump and President Xi called for a truce to the US-China trade dispute and the US agreed not to implement additional new tariffs, though the existing ones remain in place for now. In a move that could be interpreted as a goodwill gesture, President Trump also agreed to lift a ban that barred US companies from selling to Chinese-owned Huawei if there was no threat to national security.
  • Asian equity markets (Japan and China) and emerging markets were also top performers in June, and are trading at, or near their April 2019 highs.   

See how these events impacted your investments below.

ETF Portfolios

ETF Safety Portfolio was up 0.84% in June and up 3.44% in the past year. The portfolio’s gains came from its equity allocation while its almost 70% fixed income allocation return was more modest for June.

ETF Conservative Portfolio was up 1.42% in June and up 4.11% in the past year. The portfolio’s gains came from its exposure to US equities, US high yield corporate bonds and international markets. The portfolio’s fixed-income holdings contributions were modest but all positive.

ETF Balanced Portfolio was up 1.90% in June and up 5.02% in the past year. A meaningful allocation to US equities (24%) and exposure to international and Canadian equities served the Balanced portfolio well during the month.         

ETF Growth Portfolio was up 2.23% in June and up 5.25% in the past year. A 60% allocation to US equities, international equities and US high-yield corporate bonds were the key contributors to the portfolio’s performance for June.

ETF Aggressive Portfolio was up 2.39% in June and up 5.92% in the past year. With the largest exposure to US, Canadian and international equities, the Aggressive Portfolio was the best performing WealthBar portfolio in June.

Private Investment Portfolios 

Safety Private Portfolio was up 0.65% in June and up 4.53% in the past year. With a lower allocation to the equity asset class and exposure mainly to fixed income, real estate and mortgage asset classes, the portfolio’s returns were consistent with its mandate.

Balanced Private Portfolio was up 1.04% in June and up 4.91% in the past year. With a lower allocation to equities and a higher exposure to bonds, mortgages, real estate, private equity and private debt, the portfolio’s returns were less correlated to equities. 

Aggressive Private Portfolio was up 0.92% in June and up 4.86% in the past year. A negative return from one of the real estate funds offset strong gains from the portfolio’s Nicola US Tactical High-Income holdings.   

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