CAD July Market Commentary

Noteworthy Developments 

Global equities, as represented by the MSCI ACWI Index, appreciated 3.2% (+1.4% in USD) during July, with mixed performance across regions. The CAD weakened by 1.8% vs. the USD.

Global Equities 

Global equities increased by 3.2% (+1.4% in USD), with US large-cap equities (S&P 500) up 4.1% (+2.2% in USD), international developed equities up 0.4% (-1.4% in USD) and emerging market equities gaining 3.9% (+2.0% in USD).

The strong performance of the S&P 500 was driven by a) ongoing positive AI sentiment following strong technology company earnings from Google, Microsoft, and Meta with continued robust capital spending plans, and b) generally better than expected corporate earnings especially in the financial sector. Developed equity markets performed well in local currency terms (+1.4%) with Japanese stocks up 2.7% in local currencies. The gains in emerging markets were driven by strength in Chinese equities (+6.7%) which benefited from governmental stimulus, and Korea and Taiwan equities (+5.9% and +7.3%), which benefited from semiconductor stocks’ strong performance.

Globally, growth stocks (+4.0%) outperformed value stocks (+2.3%). Technology and communication services sectors (+6.1% and +3.7%) performed best, while defensive sectors such as health care and consumer staples sectors (both at -0.7%) performed worst.

Fixed Income 

The ICE BOFA Canada Broad Market Index declined by 0.7% due to increases in bond yields of 15-20 bps across the curve. Government and provincial bonds were down 1.0% while corporate bonds were flat.

Alternatives 

The HFRX Global Hedge Fund Index was up 2.4% (+0.6% in USD), with most strategies delivering positive performance. Convertible arbitrage (+3.0%) and long/short equity (+2.5%) strategies performed best.

Waterfall: +3.9% (+2.0% in USD)

Outperformed the HFRX Global Hedge Fund Index (+2.4%) with performance driven by general tightening in structured credit spreads coupled with outperformance from idiosyncratic positions.