Global Equity Weekly

November 24, 2023 | 16:38

In the Black... Friday

Economist

Senior Economist and Vice President
Economics

Carl Campus joined BMO Economics in 2007 as a Research and Technical Assistant; he was later promoted to his cur... (Read more)

Carl Campus

Senior Economist and Vice President
Economics

Carl Campus joined BMO Economics in 2007 as a Research and Technical Assistant; he was later promoted to his cur... (Read more)

While not all global equity markets ended the week on a positive note, most of the majors posted relatively solid gains as some softer economic data bolstered hopes that rate relief could be just around the corner. While U.S. Thanksgiving likely kept trading a little thinner than usual, the moderate helping of weaker U.S. data offered an early read on the start of Q4. Notably, existing home sales slipped to the lowest level since 2010 in October, while durable goods orders fell to a four-month low. For its part, the Fed has acknowledged the economy’s headwinds, noting that it is “proceeding carefully” and that its members would continue to closely monitor all incoming data in the coming months.

The S&P 500 added 1.0% this week, with the gains fairly broad-based and led by health care, consumer staples and telecom. U.S. banks notably underperformed but have still put up a respectable double-digit percentage gain from a month ago.

North of the border, Canadian CPI was a big draw early in the week, with inflation slowing largely as expected in October. While that’s certainly a welcome development for the Bank of Canada (and consumers!), we’ll likely need to witness a more meaningful deceleration in the core metrics before the BoC turns its attention to rate cuts. At present, BMO Economics sees the first BoC rate cut in July 2024. Despite some cooling on the inflation front, the TSX struggled amid volatile oil prices, slipping 0.4% from last Friday’s close. On a sector basis, energy dipped into the red, but wasn’t the worst performer. That distinction was held by consumer discretionary this week.

Looking around the globe, indices in China remained cautious given continued weakness in the country’s real estate sector and warnings from U.S. tech firms. The CSI 300 fell 0.8% to a four-week low, while the Hang Seng added 0.6%, notching its fourth straight weekly gain. Japan’s Nikkei 225 squeaked out its fourth straight weekly gain, up 0.1%, or more impressively, nearly +29% year-to-date.

European bourses mostly did well this week (with a couple exceptions) despite ECB members continuing to push back against “premature” rate cut talk. France’s CAC 40 led the way with a 0.8% gain, with Germany’s DAX (+0.7%) not far behind as Chancellor Scholz pledged a resolution to the country’s budgetary issues by year-end. Meantime, Spain’s IBEX 35 jumped 1.8% despite some spotty payment system issues disrupting Black Friday sales. On the downside, the U.K.’s FTSE 100 slipped 0.2% on the week in the wake of the Autumn Statement, while Italy’s FTSE MIB (-0.2%) also couldn’t dig out of the red despite a recently upgraded credit rating outlook from Moody’s.

Major Index Performance

North American Sector Performances

(% change over period)

Table 1 - S&P 500 Sector Performance

Source: BMO Economics, Bloomberg

Table 2 - TSX Sector Performance

Source: BMO Economics, Bloomberg

TSX Relative Sector Performance

(relative to the index, year-ago = 100; dashed line = 200-day m.a.)

S&P 500 Relative Sector Performance