First Quarter 2012 Review
The Canadian equity market as measured by the S&P/TSX Composite Index grew 4.4% over the first quarter of 2012. Gains were led by the health care sector which represents 1.5% of the overall Index. Other notable outperformers included the consumer discretionary and financials sectors. The energy sector was the only negative performer, returning -1.2%.
Global equity markets were also positive with the MSCI World Index returning 9.7% in CAD driven by increased liquidity in the European banking system and eased sovereign debt concerns across the region. U.S equities continued their resurgence from the previous quarter gaining 10.6% in CAD while Japanese equities enjoyed their best quarterly performance in 8 years, up 9.3% in CAD. Emerging market equities outpace their developed counterparts, finishing the quarter up 12.0%.
Fixed income posted negative returns with the DEX Universe Bond Index decreasing 0.2%. Corporate issues as well as maple and high-yield bonds outperformed the overall Index. Long-term bonds trailed shorter-term maturities. The Canadian yield curve shifted upward and flattened whereas the US yield curve shifted upward and steepened. The Bank of Canada maintained its overnight rate at 1.0%, while the U.S. Federal Reserve left the Fed Funds Rate target unchanged at 0.25%.