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April 5th, 2019

Trade Negotiations Fuel Markets

By PRATTE

Blogue 21 janvier EN

 

Once again this week, negotiations between China and the United States continued to influence the markets. Investors remained optimistic about a possible agreement between the two countries. Oil also had a good start to the week, even reaching its best performance in a decade. The tax season is coming to an end and we have a great article in order to prepare yourself. Here is what happened in the markets this week.

Market Brief

A good start on Monday for Wall Street as investors were enthusiastic after markets hit their best quarter in ten years. In addition, the release of rising manufacturing indicators from the US and China boosted the three leading indexes. The Dow opened up 254 points helped by gains from Caterpillar and United Technologies. While the S&P 500 gained 0.8% and Nasdaq advanced 0.9% thanks to gains from Amazon, Facebook, Netflix and Alphabet. On Tuesday, the three major US indexes have lacked direction throughout the day. “The flow of new economic information has largely dried up, especially in terms of statistics, and the market has just sought to consolidate,” said Karl Haeling of LBBW. Lyft’s stock continued its descent into hell on Tuesday, only a few days after its IPO. The stock is currently trading at a lower price than its starting IPO price.

Wall Street opened higher on Wednesday, as negotiations between China and the United States continued to evolve. The Dow gained 76 points helped by Intel and Goldman Sachs. The S&P 500 advanced 0.4% while the Nasdaq gained 0.5%. On Thursday, investors continued to watch the news surrounding a possible agreement between China and the United States. Wall Street has meanwhile opened without direction. Facebook’s stock gained 2% at the open while Tesla lost 11%.
Stocks rose at the open on Friday helped by a better than expected U.S. jobs report. The Dow gained 69 points, led by Nike and Goldman Sachs while the S&P 500 and Nasdaq were up 0.3%.

In Canada, the TSX ended Monday’s session up 0.8% and was also up at the open on Tuesday after posting its best daily performance in more than six weeks in the previous session. The financial services sector advanced 0.3%, while the commodity sector advanced 0.5%. Kirkland Lake Gold Ltd. Stock advanced 5.0%, Uni-Select Inc. was up 4.5% and Torex Gold Resources Inc. gained 4.3%. The TSX had a good session on Wednesday, reaching its highest level in 2019, closing the day up 15.99 points after hitting a high of 16,337.96 points. Canada’s main stock index opened slightly higher on Thursday, after a steady daily increase since the beginning of the week. The TSX opened higher on Friday for a fifth consecutive session a rebound in U.S. jobs growth in March reduced worries concerning the slowdown in the world’s largest economy.

Oil
Oil continued its recovery earlier this week, its best performance in a decade. Indeed, Chinese manufacturing data and new evidence of OPEC supply cuts fueled the bullish price outlook. The quarter ended on Friday, closing on record growth of 32% on WTI and 27% on Brent.
This growth is due to a reduction of production by the Organization of Petroleum Exporting Countries and its allies to avoid an overabundance. This agreement on oil cut could be extended. Also, recent losses from Venezuela and Iran also contributed to higher prices, easing fears of a slowdown in global growth. The United States, the world’s largest producer, posted a 0.8% drop in production in January. “This is the first time that production has declined since May” 2018, analysts at ING said.

Tax Season

If you still have not completed your tax return, here are some of the new tax credits that could reduce your bill. First, a new credit has been set up by the CAQ for seniors aged 70 and over, the refundable tax credit for seniors’ support. This initiative targets seniors earning less than $22,500 or couples earning less than $36,600 a year. Then, the minimum age was changed with regard to the credit for career extension, now available at age 61 (formerly 63 years) while the amounts were increased.

One of the most important credits for the 2018 tax return is definitely the one for the purchase of a first home. While the real estate market has become, in recent years, less and less attainable for first-time buyers, this new credit will certainly give them a boost. Indeed, when buying a first home, it will be possible to receive a federal credit of $626 and a provincial credit of $750, for a total tax saving of $1376. La Presse has listed for you 20 tips and news to reduce your taxes. Do not hesitate to contact us if you have any questions.

Tesla

The company’s stock fell on Thursday as markets opened after disappointing quarterly results were announced. The company delivered significantly fewer cars in the first quarter than expected, delivering 63,000 cars, 31% less than last quarter. Analysts had estimated that about 76,000 cars would be delivered during the quarter. The company attributes this decrease to the strong increase in demand abroad. “Due to a significant increase in shipments to Europe and China, which at times were five times higher than the highest levels seen before, and because of the many challenges we faced for the first time, we did not deliver at all and as of March 21st, we had delivered only half of the volumes of the quarter,” justified the group by saying that about 10,600 cars are currently in transit.

Tesla’s stock lost 11% at the open of the markets Thursday. The title has fallen by about 21% this year due to demand-side concerns, multiple price declines, ongoing job cuts and a continuing exodus of executives. Elon Musk’s company still plans to deliver between 360,000 to 400,000 vehicles during the year.

 

 

 

 

Pratte Portfolio Management is a firm registered with the Autorité des marchés financiers (AMF) and the Ontario Securities Commission (OSC).
Intended to provide general information about markets and securities and not to meet your specific needs, this report is the result of the author’s only work. The opinions (including any recommendations, if any) expressed in this report are those of the author only and do not necessarily represent those of Pratte Portfolio Management and do not constitute securities investment advisory activities designed to meet your specific needs.
The information contained in this report is derived from sources believed to be reliable, but the accuracy and completeness of this information can not be guaranteed and, in providing the information, the author and Pratte Portfolio Management assume no liability whatsoever. This information was current as of the date indicated in this bulletin, and neither the author nor Pratte Portfolio Management assumes any obligation to update it or to report any new developments with respect to this information. This report is intended for distribution in jurisdictions where the author and Pratte Portfolio Management are registered for trading in securities. Any distribution or diffusion of this report in another territory is forbidden. The author, Pratte Portfolio Management, its affiliates and their respective directors, officers and employees, and the companies with which they are associated may, from time to time, hold securities referred to in this report.
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