March 30 - April 3, 2020

What happened last week

Volatility continued as markets seesawed from day to day

Against the ever-present backdrop of COVID-19, two main stories vied for investor attention last week: the price war between major oil-producing countries Saudi Arabia and Russia, and soaring unemployment numbers in Canada and the U.S. Both issues led to a mid-week market decline, but an unexpected tweet by U.S. President Donald Trump about the ongoing oil war sparked a rally on Thursday, offsetting some of the loss.

After a historic decline, oil prices soared on hopes of a truce

On Monday, Brent crude, one of the world’s two main benchmarks for oil price, briefly fell below US$20 a barrel before closing at US$22, the lowest price since November 2002. The dramatic fall in price is a result of reduced demand as communities lock down, and increased surplus with Russia and Saudi Arabia continuing their current level of production. On Thursday, U.S. President Donald Trump shocked many by tweeting his expectation that the two sides could soon reverse their stance and cut production by up to 15 million barrels a day. The tweet was enough to send crude prices soaring as much as 35%.

Unemployment numbers climbed higher in both Canada and the U.S.

As more businesses are forced to close, the number of people applying for benefits continues to accelerate. In Canada, Bloomberg News indicated that 1.55 million Canadians filed unemployment applications between March 16 and March 25, representing about 8% of the labour force. A separate report by the Canadian Centre for Policy Alternatives warned the unemployment rate could soon jump to 13.5%, the highest level since the Second World War. In the U.S., the number of applications for unemployment benefits jumped another 6.6 million, bringing the current total number of claims in the last two weeks of March to 10 million.


The stock and bond market*
INDEX CLOSE WEEK YTD
S&P/TSX Composite 12,938.30 1.97% -24.18%
Dow Jones Industrial Avg. 21,052.53 -2.70% -26.23%
S&P 500 Index 2,488.65 -2.08% -22.97%
NASDAQ Composite 7,373.08 -1.72% -17.83%
MSCI EAFE 1,487.08 -4.03% -26.99%
10-yr GoC Yield 0.71% -0.01% -0.99%
10-yr U.S. Treasury Yield 0.62% -0.10% -1.30%
WTI Crude Oil (US$/bbl) 28.34 31.75% -53.69%
Canadian Dollar US$0.7071 -0.60% -8.16%
Bank of Canada Prime Rate 2.45%

*Weekly performance ending April 3, 2020. Sources: www.bloomberg.com, www.msci.com, www.bankofcanada.ca and www.treasury.gov.



Key take-away

Never try to time the market. Trying to recoup a loss by cashing out when the markets are down, and reinvesting when they rebound, doesn’t work. Most seasoned financial professionals will recommend to “Stay the course,” keeping your end goal in mind.

Circle these dates

  • Apr. 15: Bank of Canada interest-rate announcement and Monetary Policy Report
  • Apr. 28-29: U.S. Federal Reserve meetings and statement
  • Jun. 1: 2019 income-tax filing deadline

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