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Market and Investment Insights

Market Pulse

The easing of Canadian consumer prices at the start of the year suggests potential room for the Bank of Canada to consider interest rate cuts in the upcoming months. The consumer price index (CPI) increased by 2.9% in January year-over-year, below the anticipated 3.3%, signaling a return to the central bank’s target range for the first time since June. The contrast between Canada’s easing inflation and the rising US inflation rates indicates the Bank of Canada might lead the Federal Reserve in adjusting monetary policy, taking into account Canada’s greater rate sensitivity due to higher debt and shorter mortgage durations.

As the earnings season progressed, Corporate America notably outperformed expectations, prompting Wall Street to revise its profit forecasts upwards. More than 80% of S&P 500 companies exceeded analysts’ forecasts, with sectors such as energy, technology, and consumer staples leading the charge. High-profile companies like Amazon and Meta Platforms have reported significant earnings surprises, boosting confidence in the broader market’s resilience. However, it’s worth noting that smaller firms, as represented by the Russell 2000 Index, haven’t fared as well, indicating potential challenges for some sectors of the economy despite the overall positive trend in larger corporations.

Nvidia’s share price has continued to surge, helping it surpass Saudi Aramco as the third-most valuable public company globally. With a market capitalization of US $2.06 trillion, Nvidia dominates the graphics chip market for AI applications, leading to a 66% rise in share value this year. The remarkable rise in Nvidia’s shares follows strong earnings, reflecting Wall Street’s optimism regarding artificial intelligence’s potential to revolutionize the technology sector.

The Red Sea shipping crisis persists, amplifying disruptions in global supply chains. With 30% of the world’s container trade traversing the Suez Canal, the situation has led to a significant surge in shipping costs, particularly on routes from Asia to Europe, which have seen costs spike nearly five-fold. This upheaval is expected to result in higher prices for imported goods, with the severity and duration of the crisis influencing its impact. J.P. Morgan Research estimates that these disruptions could potentially contribute 0.3% to overall core global inflation in the first half of 2024.

 

 

All data sourced from FACTSET and SIACharts.
All data is for the reported month and in local currency.

The Ups & Downs

  • Waste Management (WM) announced an increase in their quarterly dividend, future share repurchases, and robust plans to invest further into recycling and renewable energy with their strong cash flows. Shares were up 10.9% in February.
  • Shares of Manulife Financial (MFC) climbed another 11.2% after releasing exceptionally strong performance from their insurance activities in Asia.
  • Bell Inc. (BCE) dropped 8.7% in February following an announcement to cut 4,800 jobs. Investors are also voicing concerns about the sustainability of BCE’s lofty 7.9% current dividend yield.
  • Alphabet Inc. (GOOG) was down 9.8% on the month. A selloff spurred by issues surrounding the roll-out of their new generative AI Service, Gemini.
All data sourced from FACTSET and SIACharts. All data is for the reported month and in local currency.

Portfolio Returns

As of February 29th, 2024