Media Room
The week in the markets –
August 25, 2023
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Jackson Hole – Much ado about nothing
Equity market volatility continued this week as investors weighed economic and earnings releases against the U.S. Federal Reserve Chairman’s words. Both the S&P 500 Index and the S&P/TSX Composite Index have retreated approximately 4% so far in August. We attribute much of the volatility to the recent rise in government bond yields. The U.S. 10-Year Treasury yield has risen approximately 30 bps — nearing a 15-year high — since the beginning of the month. Bond holders are voting with their feet, pushing yields higher in expectation of interest rates staying higher for longer.
Manufacturing activity for the eurozone dropped to its lowest level in 33 months as measured by the S&P Global Purchasing Managers Index (PMI). A similar survey for the U.K. also surprised by showing activity at a 31-month low. Meanwhile, the U.S. PMI flash report pointed to ongoing contraction in manufacturing along with moderation in the services sector. U.S. durable goods orders, representing items meant to last at least three years, fell during the month largely driven by a reduction in defense and commercial aircraft orders. Excluding transportation equipment, orders rose 0.5%.
NVidia, recognized for its 3D graphics processors utilized in artificial intelligence, announced results this week, surpassing estimates. The company's revenue reached $13.51 billion compared to $6.70 billion year-over-year, exceeding the estimated $11.04 billion. NVidia continues to attract investor attention, despite boasting a price-to-earnings (P/E) valuation of 112, which is considerably higher than the S&P 500 Index average of 20.19.
Federal Reserve Chairman Jerome Powell highlighted ongoing concerns about the economic climate during his speech at the U.S. central bank’s annual conference in Jackson Hole, Wyoming.
“Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell remarked. He added the Fed was prepared to hold policy at a restrictive level and raise rates further if appropriate. While it wasn’t exactly a surprising speech, investors hoping for a more dovish tone were disappointed.
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This week's market closing value - week ending August 25, 2023
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 19,863.00 | 34.13 | 0.17% | 2.54% | -1.53% | 3.96% |
| S&P 500 | 4,412.96 | 35.69 | 1.22% | 15.88% | 10.61% | 9.90% |
| DJIA | 34,346.96 | -154.92 | -0.04% | 4.10% | 8.58% | 6.82% |
| FTSE 100 | 7,338.58 | 76.15 | 0.26% | 3.02% | 9.87% | -0.18% |
| CAC 40 | 7,229.60 | 65.49 | 0.66% | 13.19% | 29.13% | 5.25% |
| DAX | 15,631.82 | 57.56 | 0.12% | 13.80% | 34.25% | 4.13% |
| Nikkei | 31,624.28 | 173.52 | 0.24% | 9.18% | 8.98% | 2.12% |
| Hang Seng | 17,956.38 | 5.53 | 0.27% | -9.27% | -5.34% | -7.48% |
| CURRENCY RETURNS |
CAD | Change | WTD | YTD | 1-year | 5-year |
| USD | 1.3602 | 0.0055 | 0.41% | 0.47% | 5.25% | 0.87% |
| Euro | 1.4693 | -0.0037 | -0.25% | 1.36% | 13.98% | -0.59% |
| Yen | 0.0093 | 0.0000 | -0.31% | -9.91% | -1.86% | -4.52% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 5.12 | 0.06 | Oil | $80.03 | -$1.27 |
| 5-year | 4.04 | -0.05 | Gold | $1,914.10 | $24.47 |
| 10-year | 3.70 | -0.01 | Natural Gas | $2.55 | -$0.02 |
| CANADIAN PRIME RATE |
|---|
| 7.20% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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