Market developments
Equities: U.S. equities were up over 1.7%, buoyed by strong earnings, despite ongoing geopolitical tensions. Market analysts express concerns that these geopolitical issues may pose short-term risks to stock performance but expect long-term support from seasonal trends and bullish narratives. Cryptocurrency-related stocks are being closely monitored as Bitcoin approaches the $100,000 mark, driven by favourable regulatory expectations amid Trump’s anticipated policies.
Fixed income: Amid efforts by the Bank of Canada to control inflation, Finance Minister Chrystia Freeland is under pressure to limit government spending. Despite these challenges, Canada holds an AAA credit rating and strong demand for its debt persists, with the yield spread between Canadian and U.S. 10-year bonds reaching historic highs. Canadian yields ended the week higher, pushing bond prices down by ~1.3%.
Commodities: Gold had one of its largest weekly increases since October of last year, driven by heightened tensions from the Russia-Ukraine conflict, which has increased its appeal as a safe-haven asset. Additionally, traders are evaluating the likelihood of further easing measures from the Federal Reserve, contributing to the bullish sentiment surrounding gold.