Natixis Canada Blog

Month: February 2016


Bonds Benefit from Risk-Off Sentiment in January

 

Jeff Herold
Jeff Herold, J. Zechner Associates, PM of NexGen Canadian Bond Funds

Bonds benefitted as many of the world’s financial markets experienced their worst start to a new year ever. Equity markets were led lower by the Chinese Shanghai index which fell more than 22%. North American equity market moves were more muted, but the U.S. S&P 500 still lost more than 5% and the S&P/TSX declined 1.4%. Commodities too were weak, with oil dropping more than 9% in the month and copper losing over 3% in value.

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Despite Headwinds, Signs of Stability in the US Exists

Dennis Ruhl, CFA J.P. Morgan Asset Management, PM of NexGen US Growth Funds

 

U.S. equity markets got off to a tumultuous start in 2016 as the S&P 500 Index suffered its second correction of this cycle, falling to 1859.33 on January 20 from a high of 2109.79 reached on November 3, an 11.9%* decline. Better-than-“feared” U.S. corporate earnings, promises of more accommodation by European Central Bank (ECB) President Mario Draghi, and a surprise interest rate cut by the Bank of Japan (BOJ) was not enough to offset investor concerns about slower growth in China and continued volatility in commodity prices. Investor risk aversion was loud and clear in January as small-cap stocks, measured by the Russell 2000 Index, declined 8.8% compared to large-cap stocks, represented by the S&P 500 Index, which lost 5.0%*.

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Risk-off Sentiment Impacts Prefs in January

Jeff Herold
Jeff Herold, J. Zechner Associates, PM of NexGen Canadian Preferred Share

Many of the world’s financial markets experienced their worst start to a new year ever. The widespread losses in various asset classes prompted a flight-to-safety bid for sovereign government bonds and a risk-off sentiment toward riskier assets, including corporate bonds and preferred shares.

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U.S. Equities Remain Attractive Amidst ‘Moderate’ Growth Environment

Donald Nesbitt & Mikhail Alkhazov – Ziegler Capital Management

Ziegler Photos

 

The “January Barometer” is an old adage on Wall Street that says, “As goes January, so goes the year.”  If there is any merit to this old proverb, the disappointing performance of the U.S. equity markets in January provides a discouraging premonition for 2016.

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