November 11, 2022

After three straight quarters of losses for stocks through the end of September, equity markets rebounded in October as the S&P 500 finished the month up 8%. Economic data hinting at slowing inflation raised investors’ hopes that the Fed will ease its aggressive rate hike policy. On the earnings front, companies had been rolling out mixed third-quarter results. Big Tech companies, including Microsoft, Google and Meta, reported disappointing revenue, but energy conglomerates such as Exxon Mobil and Chevron counteracted by beating Wall Street estimates. Elsewhere, the Hang Seng Index saw its worst month since 2008 with a more than 14% loss in October, as Xi Jinping embarked on a precedent-breaking third term as head of the Communist Party. Canada’s benchmark S&P/TSX Composite Index was 5.3% higher in October, as nine of the benchmark’s underlying sectors were positive during the month. The gain was led by the energy and information technology sectors with 13.8% and 10.8% returns, respectively. Utilities and materials were the detracting sectors during the period, with losses of 2.6% and 0.7%, respectively. Small-cap stocks, as measured by the S&P/TSX SmallCap Index, rose 3.6% for the month. The U.S. dollar depreciated 1.5% versus the loonie during the month, slightly dampening the returns of foreign markets from a Canadian investor’s standpoint. Note that all returns in this paragraph are in CAD terms. U.S.-based stocks, as measured by the S&P 500 Index, gained 6.8% in October. The gain was led by the energy and industrials sectors, with respective returns of 23.5% and 12.7%. International stocks, as measured by the FTSE Developed ex US Index, rose 4.3% in the period, while emerging markets fell 4.7%.The investment grade fixed income indices we follow were mixed in October. Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, fell 1.0% during the month. The key global investment grade bond benchmark was down 0.7% while the global high yield index was up 3.0% in October. Turning to commodities, the price of a barrel of crude oil rose 8.9% during the month, while natural gas declined 6.1%. Copper and gold had a negative month, with respective losses of 1.1% and 1.3%, while silver gained 0.4%.

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