Market update. Tech innovation helps support healthy returns
Investors benefitted from another period of steady economic growth and positive stock market movement in May. This situation coincided with low volatility and extended oil production cuts.
Northern tiger continues to outpace US thanks to rising housing sector
Canada’s economy expanded by more than 4% in the first quarter. A hot housing market drove growth, along with increases in household consumption. In the US we continue to see growth but at a slower pace. Despite the slow growth, unemployment continues to fall and wage growth rise. Meanwhile, the eurozone’s GDP grew by around 2% in the first quarter.
Tech giants help buoy US equity markets achieve record highs
In the US equity markets moved forward with the NASDAQ stock market reaching new highs. The tech-heavy index featuring companies such as Apple, Amazon, Microsoft, Facebook and Google has outperformed the S&P 500 so far this year. The VIX which measures the expected short-term turbulence of the US equity market reached record lows. This year we have observed a historically low level of realized volatility in the markets and the S&P500 returned 8.7%.
Innovation supports investments around the world
We saw other international equity markets soar. The FTSE100 reached a record high, providing a return of 4.9% this month.
It seems Emmanuel Macron being elected President of France has provided stability to European markets. One result: the Euro Stoxx was up 1.4%. In Japan the Nikkei moved upwards supported by innovative companies.
Oil price ebbs and flows as countries diverge on production strategies
The price of oil remain volatile with wide swings of 10% in both directions this month. Causes included increasing US production, OPEC extending production cuts, and President Trump proposing to sell half of the US strategic oil reserves for cash. Canada’s stock market is dependant on energy and the S&P/TSX Composite declined by 1.3% last month.
Our portfolios continued to benefit from broad-based diversification and delivered positive returns this month.