Weekly Commentary – Ending 01/06/2012

The first week of 2012, ending January 6th, saw many major markets in positive territory due to better- than –expected earnings reports and economic data.

The S&P/TSX Composite Index gained 2.0% with eight of ten sectors ending the week with positive returns. Statistics Canada reported that the unemployment rate rose in December to 7.5%, from 7.4% in November, following an increase in the labour force, while job openings fell. The Ivey purchasing managers’ index, a measure of government and business spending, rose in December to 63.5, from 59.9 in November, led by increases in purchases in inventory.

U.S. equities gained for the week on the heels of positive economic data. The S&P 500 Index, Dow Jones Index and the Nasdaq gained 1.6%, 1.2% and 2.7% respectively. The unemployment rate fell to 8.5% in December, from a revised 8.7% in November. Moreover, initial jobless claims for the week ended December 31st decreased by 15,000, to 372,000. The Institute for Supply Management (ISM) Factory Index rose to 53.9 in December, up from November, indicating an improvement in manufacturing.

European markets were mixed for the week as sovereign debt issues continued to worry investors. The German DAX gained 2.7%, France’s CAC declined by 0.7% and the U.K.’s FTSE gained 1.4%. European inflation decreased to 2.8% in December, from 3.0% in November. This was the first decrease in five months. Euro-region manufacturing and services output shrank less than expected in December, while French consumer spending fell unexpectedly in November.

Asian markets were mostly up for the week. China’s Shanghai composite lost 1.6%, India’s Sensex gained 2.7%, Hong Kong’s Hang Seng was gained 0.9% and Japan’s Nikkei lost 0.8% for the week. China’s Purchasing Managers’ Index (PMI) rose to 50.3 in December, up from 49 in November. The figure came in slight above 50, which signals minor expansion.
Economic releases in Canada for the week ahead include Trade balance, building permits and new house price index for November. In the U.S., investors will focus on Trade balance retail sales, and wholesale inventories.

This commentary is published as an information service for clients. This commentary is not intended to provide, and should not be construed as providing, individual financial, tax or investment advice. The information contained herein is drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed. Opinions expressed herein by the author and third parties may not necessarily reflect those of Craig & Taylor Associates and Insurance Agency Ltd.

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