Optimism over an economic recovery continues to drive markets in the U.S. and Canada. Although U.S. markets were closed for Memorial Day, the TSX started the week off with a strong Monday session, climbing 162 points. However, the bond market provided an interesting contrast, as Canada’s 10-year government bond yield fell below 0.5% on Monday–an indication of just how weak the outlook for the Canadian economy has become.
Investor sentiment was once again positive on Tuesday as U.S. stocks rose sharply, fueled by signs that economic activity has resumed at a faster-than-expected pace in some parts of the country. By Tuesday’s close, the Dow was up 530 points, although gains were pared a bit in afternoon trading as tensions between the U.S. and China continue to grow–this time over possible U.S. sanctions.
N.A. markets climbed even higher on Wednesday as the S&P 500 closed above 3,000 for the first time since March 5, and the Dow breached the 25,000 mark, posting its largest two-day advance–1,083 points–in more than a month.
The rally continued in early trading Thursday as U.S. stocks climbed in response to declining U.S. jobless claims. However, gains eroded later in the day as a new standoff emerged between the world’s two superpowers after China voted to override Hong Kong’s autonomy, a decision that could prompt the U.S. to revoke Hong Kong’s special trading status and threaten its standing as an international financial hub. By Thursday’s close, the Dow was down by nearly 150 points.
Although stocks have been on an amazing tear, U.S. consumer sentiment is hovering near the lowest level in nearly a decade. Personal incomes in March suffered the steepest drop since 2013, and consumer spending fell at the fastest rate in over six decades. The numbers for April are expected to be even worse.
In other economic data, the U.S. Commerce Department reported Thursday that Q1 GDP fell at a 5% annual rate–the largest quarterly rate of decline since the last recession. And many analysts are expecting a much bigger contraction in Q2. Forecasting firm IHS Markit projected this week that Q2 GDP would shrink at an annual rate of 39%.
source https://richarddri.ca/n-a-markets-continue-climbing-u-s-china-tensions-re-emerge/
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