Natixis Canada Blog

Equity:


U.S. Equities Advance in April on Better-Than-Expected Earnings

Dennis Ruhl, Portfolio Manager, NexGen U.S. Growth Funds

U.S. equity markets advanced modestly in April as better-than-expected corporate earnings were able to offset soft economic releases. Stock prices drifted lower in the first half of the month as expectations for the implementation of President Trump’s ambitious pro-growth agenda continues to fade and declining bond yields reignited investor concerns of tepid nominal growth. As the first-quarter earnings season progressed, U.S. equity markets were able to recover earlier losses as better-than-expected results from the industrial sector in particular caused investors to question whether demand trends are stronger than recent economic releases suggest. Small-cap stocks measured by the Russell 2000 Index slightly outperformed large-cap stocks as represented by the S&P 500 Index, as both indices rose 1.1%* and 1.0%*, respectively.

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Disparity Between Investor Sentiment and Economic Data Remains

Donald Nesbitt & Mikhail Alkhazov, Ziegler Capital Management, Portfolio Managers of NexGen US Dividend Plus Funds

The Trump administration completed its first 100 days in office at the end of April, with stock market returns seemingly giving a nod of approval.  Equity markets appeared to shrug off geopolitical issues as well, sailing relatively smoothly through the turbulence caused by European elections, a U.S. missile attack on Syria and ongoing tensions in North Korea.

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Equity Market’s Advance in Q1 Fueled by Strong Corporate Earnings, Positive Economic Data and Optimism About the Trump Administration

Paul Stewart; Michael Buckius; Kenneth Toft; Daniel Ashcraft; Co-Managers, Gateway Low Volatility U.S. Equity Fund

The S&P 500® Index gained 6.07%* (in Canadian dollar terms, the return for the quarter was 5.25%) for the first quarter of 2017. The equity market posted positive returns each month of the quarter with the S&P 500® Index returning 1.90%*, 3.97%* and 0.12%* for January, February and March, respectively. The equity market’s advance was steady over the first two months and reached a year-to-date closing high on March 1st. The S&P 500® Index declined 2.16%* from March 1st through March 27th before advancing at month-end. Realized volatility and implied volatility were persistently low throughout the quarter.

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Strengthening Economic Activity Sent Global Equity Indexes Higher in Q1 2017

 

David G. Herro & Michael Manelli, Harris Associates, Portfolio Managers of Oakmark International Natixis Funds

Global markets marched higher in the first quarter as economic activity continued to strengthen. The Dow Jones Industrial Average notched its sixth consecutive quarterly gain, and the STOXX Europe 600 Index advanced for the third quarter in a row. In February, the U.S. personal consumption expenditures (PCE) index surpassed the Federal Reserve’s long-term target. The Eurozone’s own annual rate of inflation also reached the European Central Bank’s 2% target in February for the first time in four years. Citing improvements to the labor market and economic health, the Federal Reserve once again lifted interest rates in the U.S.

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Positive Investor Sentiment Sent U.S. Equity Indexes to All-Time Highs in Q1 2017

Oakmark Natixis Portfolio Managers
William Nygren; Kevin Grant; Michael Mangan, Harris Associates, Co-Managers, Oakmark Natixis Funds

Investor sentiment was notably positive coming into 2017 and U.S. markets built on this momentum in the first quarter, pushing key indexes to reach all-time highs during the period. However, the rally halted late in March after the new administration failed to repeal the Affordable Care Act. The Dow Jones Industrial Average fell for eight consecutive sessions, stemming from investors’ skepticism about the Republican Party’s ability to get other initiatives passed quickly through the legislature. Even so, benchmarks ended in positive territory for the past three months.

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