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CAD January Market Performance

February delivered a retreat from January’s strong start with global equities down 0.4% in CAD.


February delivered a retreat from January’s strong start.   Global equities were down 0.4% in CAD (-2.9% is USD) with the weak performance driven by swift increases in interest rates as inflation data in the US and Europe proved disappointing (in contrast to the prior three months of inflation data) and economic data surprised to the upside.  Investors increased their terminal rate hike assumptions especially in the US and Europe, leading to to weaker sentiment for equities.  The CAD weakened by 2.6% vs. the USD during the month. 

Global equities

Global equities were down 0.4% in CAD (-2.9% in USD) with all regions delivering negative returns in USD terms.  The S&P 500 was up 0.5% in CAD (-2.0% in USD), international developed stocks (MSCI EAFE) were up 0.4% in CAD (down 2.1% in USD) and the MSCI Emerging Markets Index was down 4.1% in CAD (-6.5% USD).   US and Intl. Developed stocks were down primarily due to disappointing inflation data and the resulting swift move upwards in interest rates.   Emerging markets declined primarily due to China’s 8.1% February CAD decline as investors took profits following a 50% rally in Chinese equities from Nov 2022 through January 2023.  Globally, growth and value stocks performed relatively closely at flat and down -0.7% respectively in CAD (-2.5% and -3.2% in USD) which was somewhat surprising given the sharp move up in interest rates during the month.  Globally, on a relative basis, technology and industrials sectors outperformed at +2.2% and +1.4% in CAD (-0.4% and -1.1% in USD) while materials, energy, and healthcare sectors underperformed at -3.4%, -2.3% and -1.9% in CAD (-5.8%, -4.7% and -4.3% in USD).

Fixed Income

The benchmark Canada Broad Market Bond Index was down 1.0% on the month, with Canadian government bonds down 0.6%, provisional and municipal bonds down 1.2% and corporate bonds down 1.1%.   Interest rate increases drove the bond market declines.  


The HRFX Global Hedge Fund Index was up 2.1% in CAD (down 0.5% in USD) with most strategies up between 1.5% and 2.0% in CAD (down less than 1.0% in USD).  Global Macro strategies performed best and were up 3.0% for the month in CAD (+0.4% in USD). 


Carrhae:  -5.3% in CAD (-7.7% in USD)

Driven by profit taking in emerging markets (MSCI EM down 4.1% on the month) and relatively higher exposure to Chinese internet and consumer discretionary names (MSCI China down 8.6% on the month).

Eminence: +1.7% in CAD (-0.8% in USD) 

With outperformance vs. the MSCI World Index (flat in CAD) driven by idiosyncratic performance of underlying positions following earnings releases, especially in software stocks.

Octagon:  +4.1% in CAD (+1.5% in USD)

With strong performance driven by exposure to rising rates, tightening spreads and use of fund-level leverage.

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