Weekly Market Commentary

Equity markets bounce back
Equity markets bounced back this week as investors took a break from concerns about recent global developments to focus on expectations of an improving economy.

Stock markets around the world rose despite Japan’s continuing struggle to deal with the aftermath of the earthquake and tsunami and military action against Libya.

The fact that Japan’s nuclear reactor crisis hadn’t worsened eased investor worries. Hopes that the Libyan crisis might be shortened by Western military action also contributed to a more upbeat mood.

The MSCI World Index, which measures markets in 24 developed nations, experienced its longest rally since September. Emerging markets also gained—particularly those with a high resource component—as investors’ recent risk-aversion faded somewhat. Asian stock markets rallied on optimism about Japan rebuilding efforts.

One sign that investors are again becoming more comfortable with stocks after they hit 2011 lows last week is a steep fall in the Chicago Board Options Exchange Volatility Index (VIX)—dubbed the fear index—over just a few days.

Canadian stocks benefitted from the improved mood of investors. Base metals stocks gained as prices of metals such as copper started climbing on expectations of increased demand as a result of Japan rebuilding. Gold stocks rose as bullion hit new records.

Wall Street was boosted by a giant merger in the telecommunications sector and by strong corporate earnings reports, especially in the technology sector. The materials sector rose on strong metals prices. Economic news also helped U.S. share prices.

Revisions to fourth-quarter GDP figures showed the U.S. economy grew more than originally thought, at a 3.1% annual rate. A decline in jobless claims fuelled optimism over the growing strength of the U.S. economic recovery.

For a look at what's ahead for this week:

http://www.investorsgroup.com/consult/terry.pitz/english/cnf_frameset.asp?pg=/English/prodServices/marketCom/default.shtml

Weekly Market Commentary

Economic worries a drag on share prices
Unrest in Libya, high oil prices, resurfacing concerns over the euro zone’s fiscal health and weak economic data hurt global equity markets this week.

As the week progressed other developments cast a pall over markets. China’s worst trade deficit in seven years sparked worries that its economy might be slowing. China’s export growth was far slower than expected in February. The health of the euro zone was back in the forefront as Spain’s sovereign debt was downgraded by Moody’s credit rating agency. Meanwhile, in the U.S. higher-than-expected weekly unemployment claims helped send shares downward as investors fretted over the health of the jobs recovery. However, there was good news late in the week as U.S. retail sales climbed in February by the largest amount in four months.

The Japanese earthquake and ensuing tsunami had a relatively muted impact on markets outside of Asia. While Asian markets reacted negatively as events in Japan unfolded Friday, markets elsewhere awaited news of the full outcome.

The week’s developments had a considerable impact on Canadian stocks. Shares of resource producers, in particular, were hurt by fears that commodities demand could slacken. Energy stocks were hit as the price of oil eased toward week’s end. The S&P/TSX Composite Index lost ground in the first four days of the week, but advanced slightly Friday.

The exodus from emerging markets continued as investors shunned risk. However, bonds benefited as investors sold off stocks and looked toward perceived safer havens.

Market declines overshadowed the second anniversary of the current bull market for North American equities. In the two years since hitting lows on March 9, 2009, the S&P/TSX advanced by 83%. On Wall Street the S&P 500 gained 95%, the Dow Jones Industrial Average 87% and the NASDAQ Composite 118% as of March 9, 2011.

For a look at the week ahead go to :

http://www.investorsgroup.com/consult/terry.pitz/english/cnf_frameset.asp?pg=/English/prodServices/marketCom/default.shtml