Second Quarter 2016 Market Review

Canadian equities were up this quarter, gaining 5.1%. Commodity related sectors were strong performers with the materials and energy sectors benefiting from higher gold, silver and oil prices respectively. The utilities sector also contributed positively to this quarter’s performance. The health care, technology, consumer staples and consumer discretionary sectors all had negative returns for the quarter.

World markets, represented by the MSCI World Index (C$), and the U.S. market represented by the S&P 500 (C$) were up 1.6% and 2.8% respectively for the quarter. The MSCI EAFE Index (C$) was down 0.8% for the quarter. The MSCI Emerging Markets ($C) Index also performed relatively well, and was up 1.2% at the end of the quarter. Overall global equities and Emerging Market equities generated positive local currency returns for the quarter, but saw market turmoil during the final week of the quarter offset most of the gains generated during the quarter.

The gap between Canadian and U.S. interest rates narrowed again this quarter, as Canadian rates fell 16 basis points while U.S. rates fell 25 basis points. The Bank of Canada left its overnight rate unchanged at 0.50% during the second quarter to accommodate for the negative GDP impact of the Alberta wild fires. The FTSE TMX Canada Universe Bond Index was up 2.6% for the quarter. Provincial and Municipal bonds outperformed the index for the quarter while the Corporate and Federal bonds under performed.