Market developments
Equities: North American stocks drifted lower this week, with the S&P 500 and TSX down 1.7% and 1.3% respectively. Despite macroeconomic challenges, corporate earnings have been strong with the S&P 500 tracking a 13% fourth-quarter earnings growth, surpassing initial estimates of 7.3%. Investors now look ahead to key retail earnings reports from Home Depot, Lowe’s, Target, and Nordstrom next week for further insights into consumer spending and economic conditions.
Fixed Income: The Federal Reserve may keep interest rates unchanged in response to persistent inflation concerns. St. Louis Fed President Alberto Musalem signaled that monetary policy should stay “modestly restrictive” until inflation is firmly on track toward the 2% target. Government yields continue to swing back and forth, leading to a relatively flat week for bond prices.
Commodities: Gold had its eighth consecutive weekly advance due to robust haven demand fueled by geopolitical and trade tensions. Gold has hit successive records this year, following a 27% increase last year, amid mounting concerns over Trump’s disruptive trade and geopolitical agendas.