May 18-22, 2020

What happened last week

North American stock exchanges continued to rise and fall

Inconsistency was the only thing investors could bank on last week with major North American stock markets posting significant gains and losses through the week. Canada’s S&P/TSX Composite was closed on Monday for Victoria Day, but south of the border the Dow Jones Industrial Average shot up 3.9% (over 900 points), the S&P 500 was up 3.2% and the Nasdaq also climbed 2.4%. The surge was largely driven by news that American biotechnology company Moderna saw positive results during early human trials of its experimental COVID-19 vaccine. But on Tuesday, after a STAT news article questioned a lack of critical data in Moderna’s reporting, the markets dipped. The rest of the week saw more ebb and flow as investors weighed commentary by the U.S. Federal Reserve chairman and economic data from the U.S. Labor Department that highlighted another 2.44 million initial jobless claims for the week ending May 16.

Oil had one of its best weeks since April’s historic decline

May has been a bounce-back month for oil prices with benchmarks West Texas Intermediate and Brent crude up 82% and 38% respectively. Last week was particularly strong with U.S. crude prices notching gains for six consecutive days (as of Thursday), reaching a 10-week high on Wednesday.

The U.S. Energy Information Administration reported crude stock at one of the country’s main storage hubs in Cushing, Oklahoma, was down by 5.5 million barrels, indicating that the production cuts implemented May 1 appear to be having the desired effect on the industry, along with increased demand as lockdowns lift.

The Canadian inflation rate fell for the first time since 2009

Canada’s annualized inflation rate fell 0.2% in April according to Statistics Canada’s Consumer Price Index report. Prices for consumer goods fell across most categories as COVID-19 pandemic restrictions overwhelmed businesses and the economy. The biggest price declines among major categories were in gas, which fell almost 40%, travel and tourism down 10% and retail clothing down close to 6% on a year-over-year basis.

U.S. senate approves legislation aimed at delisting Chinese companies

Last week, the U.S. senate approved new legislation – the Holding Foreign Companies Accountable Act – which would require companies to prove they’re not owned or controlled by a foreign government before they can list shares on U.S. stock exchanges. These companies would also have to comply with audits by the Public Company Accounting Oversight Board. While the law could be applied to any foreign company looking to access U.S. capital, its primary target is China. The bill, which was co-sponsored by Republican Senator John Kennedy and Democratic Senator Chris Van Hollen, must pass through the House of Representatives and then be signed into law by the U.S. President to take effect. Speaking on the Senate floor, Senator Kennedy said, “I do not want to get into a new cold war. All I want, and I think all the rest of us want, is for China to play by the rules.”

The stock and bond market*
S&P/TSX Composite 14,913.64 1.88% -12.60%
Dow Jones Industrial Avg. 24,465.16 3.29% -14.27%
S&P 500 Index 2,955.45 3.20% -8.52%
NASDAQ Composite 9,324.59 3.44% 3.92%
MSCI EAFE 1,641.59 2.94% -19.41%
10-yr GoC Yield 0.51% -0.03% -1.19%
10-yr U.S. Treasury Yield 0.66% 0.02% -1.26%
WTI Crude Oil (US$/bbl) 33.25 12.98% -45.67%
Canadian Dollar US$0.7135 0.56% -7.33%
Bank of Canada Prime Rate 2.45%

*Weekly performance ending May 22, 2020. Sources:,, and

What’s ahead

Economic reports: Markets are likely to react to a slew of reports covering U.S. housing, manufacturing, employment, oil production, trade and consumer spending, which will be released through the week. Investors will also get deeper insight into Canadian economic activity during the first three months of 2020, with an update on Q1 Gross Domestic Product scheduled for release on Friday.

Circle these dates

  • June 1: 2019 income-tax filing deadline
  • June 3: Bank of Canada interest-rate announcement
  • June 9-10: U.S. Federal Reserve meetings and statement

Key take-away

All investing involves some risk. Having an investment plan geared toward your individual goals and objectives – and sticking to it – is the best defence against market downturns.

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