August 2022 Review of the Markets
Joseph Alfie , CIM?
Portfolio Manager, Myriad Private Wealth with iA Private Wealth inc. Co-Founder of Myriad Group Consultants Inc.
In August, developed market indices continued to decline as it became evident that further substantial interest rate increases may be required to curb inflation. The CPI for Canada fell from 8.1% to 7.6% in the latest month but remains "far too high" for the Bank of Canada. Additionally, it remains significantly above the Bank's inflation target of 2%. The policy set interest rate has been raised from 0.25% to 3.25% since March of this year.?
Here is a recap of what happened in the markets in the month of August.
S&P/TSX
In August, the S&P TSX index?lost -1.84%. With this performance, the index has had a?year-to-date performance of -8.92%. Oil prices and bullion prices rebounded in the energy and materials sectors, with 2.7% and 2.4% increases, respectively, in these sectors.?
In addition, August’s unemployment rate rose from 4.9% to 5.4%, exceeding expectations and surpassing the previous month's record low of 4.9%. Toronto's benchmark stock index rose 2.6% during the week.
?S&P 500?
Despite trying to balance inflation by the by the Fed, rising costs which have eaten profits in August impacted the 500 largest companies in the United States, the S&P 500 decreased?-4.24 % this month, the S&P 500 ended?down 17.02 % year-to-date.
?Dow Jones
The Dow Jones Industrial?lost 4.06% for the month?and was down?13.29% year-to-date. Given the last few months left to the year, we will see if the Dow Jones can recover.
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?NASDAQ
The Nasdaq Composite finished the session at its lowest level in August. Nasdaq?lost 4.64% for the month?and was?down 24.47% year-to-date. The tech-heavy index is retreating heavily since it's 2021 high's.
?LOOKING AHEAD TO SEPTEMBER
The Bank of Canada still has work to do however a big move was made, a rate hike of 0.75% was announced on September 7th. The key is not to try to time the market, they key is to focus on your long-term approach and purchase strong companies at a discount over time.
Sources:
Macro Musings August 23rd
TD Securities Stock Market Performance Data
This information has been prepared by Joseph Alfie who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.