Market Update. Stocks rise, bonds fall. While corporations ‘go wild’ the experts grows cautious
- Balanced ETF Portfolio up 11.2% YTD.
- Growth ETF Portfolio up 12.3% YTD
- Aggressive ETF Portfolio up 13.5% YTD.
See more about how our portfolios performed.
In December, we saw a flurry of all-time-high announcements on major stock exchanges. The S&P 500 had its best year since 2013, with an overall gain of 19.4%. The S&P/TSX Composite index likewise posted new highs throughout the month. The Dow likewise was looking at its best year since 2013, up an impressive 25% in the year to date.
Investor confidence still remains high. This is seemingly due to continued enthusiasm about US tax reform we noted in our previous market update. US President Donald Trump noted as he signed the tax bill, “Corporations are literally going wild.”
As public corporations reap higher values, hiring spree continues
The US continued to add jobs, with unemployment at its lowest level since the turn of the century according to recent Labor Department data. “Payrolls rose 228,000, above the median economist estimate of 195,000, after a downwardly revised 244,000 advance,” noted a Fortune report.
North American economies push ahead, despite hurdles
As industrial production beat expectations and the US economy continued to thrive overall, the US felt room to raise interest rates. As a consequence, bond rates fell in December.
North of the border, Canadian unemployment fell to its lowest rate in 40 years. A higher oil price in December did not seem to dampen spirits, though Canadian producers had difficulty banking on it due to supply hurdles. Canada’s real estate scene, which has an outsized effect on the wider economy, is somewhat flat of late, particularly in Ontario, partly due to recent interest rate hikes. That said, BC’s housing market has retained heat throughout the winter.
Uncertainty over NAFTA negotiations is having an impact, with some Canadian companies investigating a move into the US. Overall, a fast-rising Canadian economy pushed up the dollar significantly, which impacted performance in portfolios where we trade in Canadian assets.
Further afield, the Nikkei was flat and European markets actually fell back in December, though particular regions beat the unseasonal gloom. The London stock market hit a record high after Christmas.
Tech and new media companies help drive the story
On the technology front, Apple and Amazon enjoyed investor goodwill as the holiday gift buying season brought a boon to their bottom lines. Disney’s purchase of 21st Century Fox assets for $52.4 billion raised eyebrows, as the company prepares to do battle with a surging Amazon Prime and fast-growing Netflix.
What does all this mean for your investments?
In December, WealthBar’s portfolios performed admirably in a season of great expectations where record highs were reported on multiple fronts. We remain well-positioned to take advantage of current growth trends.
That said, the exuberance of investors does warrant an extra note of caution moving forward into 2018. We remain focused on mitigating volatility and on ensuring that the significant gains of 2017 are reinvested in a responsible way.
Do you have questions about your investments at WealthBar? Set up a call to talk to your financial advisor, who can help you get the answers you need.