Thursday, 27 August 2015

August 2015: Market News

    Over the past few weeks markets have been acting crazily! Especially within the last couple of days there has been considerable market volatility. I am sure many of you, myself included have seen our portfolio drop considerably in value. However, I would think many of you have also smiled in a certain degree of happiness at the prospects of getting better value for your cash if you are lucky enough to have some at the ready.

    Many of the worlds major stock markets have suffered quite a bit in the past few days, even after Tuesday slight bounce back. The Toronto Stock Exchange (TSX) was down 8.41% From what I gather from headlines and news articles, the troubles seem to be, at least in part due to the following events and predicaments:

- China stock market collapsing - rate cut slightly helps to alleviate that, but more importantly shows that China's government may be willing to intervene.
- China devalued its currency by 4.4% against the US dollar. Upside could potentially be more exports and higher growth in China.
- Weaker than expected growth coming from China. With weak growth generally considered any single digit number.
- Continued weak commodity prices; in particular oil and gold.
- There are also fears of a Canadian housing market correction, as well as retail space correction/slump due to decreased demand from energy companies in Western Canada.

    On the flip side of all the bad news, and omens of a full on stock market correction there has been some good news of late.

- The Canadian housing market continues to be going strong, particular in Vancouver and Toronto.
- Canadian big banks have all been posting profit, including a couple dividend raises. TD profit is up 8%, CIBC 6%, National Bank of Canada 3%.RBC 4%.
- US economy grew by 3.7%, more than previously expected due to increased consumer demand.

    As for some upcoming events which may affect the stock markets we have the following:

- Bank of Canada will decided whether or not to keep the current interest rate, or raise, or lower it again on September 9th.
- Over the next week or so there should be an announcement from President Obama regarding its final Keystone XL pipeline decision.
-  The Federal Reserve will make an interest rate change decision on September 16th, up until the recent turmoil it seemed likely that a rate hike was certain. Now, analysts are not as sure as before.

1 comment:

  1. Nice summary.
    The market is acting crazy indeed. And I am more surprised by the rapid recovery than the drop earlier this week. Definitely lots of interesting moving parts. Bring the panic back on -- I want to buy shares at a discount! :)