Another week marked by volatility for the markets who are still affected by trade tensions. The postponed vote for Brexit in Britain hits world markets directly this week. Dollorama’s stock continued to evolve without direction after disappointing earnings, despite the launch of its new transactional site. Here is what happened on the markets this week.
Please note that this will be our last “this week in the markets” for the holiday season.
The stock market started the week in the red. Investors were still worried about the difficult relations between China and the United States as well as the complications surrounding Brexit. “The biggest concern for the markets today is related to the commercial relations with China,” commented Art Hogan of B. Riley FBR. However, the three major US indexes rebounded at the end of the day, ending up higher thanks to a resurgence of technology stocks.
The trend continued at the open on Tuesday, however, the markets failed to maintain their gain, despite hopes of progress between China and the United States and Wall Street ended the day with a slight decline. On Wednesday, several news concerning the trade war suggested a reduction of the tension between China and the United States. As a result, the three leading indexes started the day up. China announced it wanted to facilitate access to its economy for foreign companies. Investors, however, remain very cautious as Wall Street has been swimming in a volatility climate for several days.
A good start Thursday for the three main US indexes. The Dow opened up 110 points as Caterpillar outperformed, the S&P 500 gained 0.48% and the Nasdaq advanced 0.52%. Investors are increasingly optimistic that an agreement will be reached between China and the United States. General Motors’ stock rebounded by 10% Thursday while the technology sector was performing well.
The TSX also had a bad start on Monday, ending the day down 66 points, still pulled down by the energy sector. Despite a rise in early trading on Tuesday, the TSX closed the day down 60.45 points. The rise in the barrel of oil has failed to surpass geopolitical concerns. On Wednesday, the Toronto Stock Exchange opened 150 points in advance, supported by further gains in the barrel of oil following a report announcing a drop in US inventory. Thursday, TSX opened up 75 points as material stocks outperformed.
The manufacturer of mini cameras GoPro announced its decision to cease production of its devices in China. The company fears the imposition of tariffs by Washington who is already bathing in full trade war with China. “Today’s geopolitical and economic climates require agility and we respond proactively to tariff concerns by removing most of our production from China for the United States,” said a senior GoPro official.
The company, however, announced it will continue its production in China of cameras destined for markets other than the United States. As a result of this news, the stock lost more than 1%. The stock peaked in September 2014, trading at $85, while Monday, it traded at $4.92.
On Monday, the Brexit vote in the UK Parliament was postponed indefinitely. According to Theresa May, the deal negotiated with Brussels would probably not have secured the necessary vote. The official exit of Britain from the European Union is scheduled for March 29th. The decision to postpone the vote is, according to several analysts, a strategy on the part of Mrs. May to gain time and thus put pressure on the deputies with the threat of a Brexit without agreement if the text is not voted.
Moreover, Morningstar published this week an interesting study on different sectors such as banks, automobiles, etc. that could be affected in case of a “wild” Brexit. A publication to read to be well prepared if this is the case.
Dollorama launched this week its transactional site after more than two years of waiting. The shipping costs will be set at $18, so you will have to buy several items for the delivery price to be advantageous. During the “pilot project phase,” delivery will only be offered in Quebec. “The goal is to see if there are any improvements that should be made in navigation, before launching the site in other provinces,” said Rachel Desrosiers. Neil Rossy said last June that the tests would last “a month or two,” or more “if there are many mistakes to correct.”
The site is primarily for businesses, but individuals may also purchase merchandise. According to the news, the stock opened without direction. Last week, the retailer released earnings below analysts’ expectations. The stock then dropped 11.8%. The company’s stock has plummeted 36% since its last summit back in September.
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