Natixis Canada Blog

Month: May 2016


Global Markets Rebound; Credit Spreads Tighten

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Darren Ducharme & Harold Scheer, Baker Gilmore & Associates, Portfolio Managers of NexGen Corporate Bond Funds

Global markets rebounded in April, prompting government bond yields in most developed markets to move modestly higher. Credit spreads tightened along with the increase in investor risk appetite – in Canada, both provincial and corporate spreads declined by 10 to 15 basis points – while both developed and emerging equity markets rallied. Commodity prices moved sharply higher – led by a 15% jump in energy prices – and the US dollar continued to soften, falling 1.6% against major world currencies.

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US Equities Rally Despite Choppy Start

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

U.S. equity markets ended April with modest gains. After a choppy start, equities rallied as a falling U.S. dollar gave much-needed relief to depressed commodity prices and earnings from the financial sector were received positively by investors. The S&P 500 Index traded briefly above the 2100 level, reaching 2102.40 on April 20. Stock prices then began to drift lower as earnings from key players in the technology sector disappointed and economic data was mixed. As economic releases continued to point towards lukewarm growth, investor fears of an U.S. imminent recession subsided, enabling small-cap stocks to outperform. Small-cap stocks measured by the Russell 2000 Index advanced 1.6%* while large-cap stocks represented by the S&P 500 rose 0.4%*.

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Preferred Shares Continue to Recover in April

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

The recovery in riskier assets extended for a third month. The price of oil moved higher, equities gained, the Canadian dollar strengthened, and credit-related yield spreads narrowed. Preferred shares enjoyed good gains as they struggled to erase losses suffered earlier in the year. The S&P/TSX Preferred Share Index earned 2.96% in the month.

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Continued Appetite for Risk Affects Bond Market in April

 

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

The flight-to-safety bid for bonds that occurred early in 2016 continued to fade in April, as the recovery in riskier assets extended for a third month. The price of oil moved higher, equities gained, the Canadian dollar strengthened, and credit-related yield spreads narrowed. Benchmark government bond prices declined and yields rose as investors shifted their attention to other asset classes. The FTSE TMX Canada Universe Bond Index returned -0.08% in the month.

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Investors Reward Dividend-Paying Stocks

Donald Nesbitt & Mikhail Alkhazov – Ziegler Capital Management

Ziegler Photos

Market Summary:

U.S. equities treaded sideways in April as the market assessed first quarter earnings results.  The S&P 500 Index returned only 0.4%* in April, with smaller issues generally performing better, as the mid-cap S&P 400 and small-cap S&P 600 Indexes each increased 1.2%* for the month.  Value-oriented equity management approaches outperformed growth-tilted strategies in April, as investors rewarded companies with reasonable valuations and attractive dividend yields. The Russell 1000 Value Index increased 2.1%* in April, led higher by the Energy (+9.0%)* and Materials (+8.1%)* sectors, which benefitted from a rebound in commodities, while the Information Technology (-4.8%)* and Utilities (-2.0%)* sectors trailed.

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