Q4 Market Review
Canadian equities were up this quarter, gaining 4.5% and returning 21.1% over the year.
Financials led the index this quarter, with energy and industrials as the only other two sectors to outperform the index.
Telecommunications, consumer staples, technology, materials, consumer discretionary, real estate and utilities all underperformed the index this quarter. The health care sector also significantly underperformed the index as earnings failed to meet expectations.
World markets, represented by the MSCI World Index, and the U.S. market represented by the S&P 500 were up 4.1% and 6.3% respectively for the quarter.
The MSCI EAFE Index was up 1.3% for the quarter.
The MSCI Emerging Markets Index failed to continue its previous quarter`s growth and closed down -2.1% at the end of the quarter.
U.S. and global markets posted strong performance this quarter while emerging markets lagged their developed market peers. Expectations of the Fed tightening interest rates through 2017 affected economic outlooks.
Canadian Fixed Income
Interest rates increased by approximately 59 basis points across the Canadian yield curve, and 70 basis points across the US yield curve.
The Bank of Canada left its overnight rate unchanged at 0.50% during the fourth quarter to accommodate the weaker than expected growth.
The FTSE TMX Canada Universe Bond Index was down -3.4% for the quarter.
Provincial and municipal bonds underperformed the index for the quarter while corporate and federal bonds outperformed.