Markets give back to end a positive, but turbulent week

Even though Trump signed the much-anticipated US$2.2-trillion aid bill–the largest of its kind in American history–markets on Friday gave back a few of the monstrous gains of Tuesday, Wednesday and Thursday. Altogether, those leaps added up to a technical bull market as markets returned to around -16% from the year’s peak. However, Friday’s losses inches markets back into bear territory (for the year) at -3.79% for the Nasdaq, -2.35% for the S&P and -5.11% for the TSX. To put things in perspective, those declines were mild compared to days of double-digit swings. Also, for the past week the Nasdaq rose over 9% while the TSX gained 7.05%. Undoubtedly, some traders were taking profits, while others continue to feel anxious over the rising number of cases in America. Per capita, Canada’s number of infected cases remains less than half of that of the U.S. Both countries (and many others) have by now pumped massive amounts of stimulus into their economies to avert a depression. By now, it’s a foregone conclusion that economies will enter a technical recession if we aren’t in one already, but we may be spared a prolonged, painful one.

However, the gloom must be weighed against China’s economy gradually coming back online and the continuing decline of new cases there, while Italy may be flatlining (remember, new cases, not total). These two countries offer hope for the U.S. which now leads the world in cases as new cases. It’s still a little early to see the benefits of containment measures (self-isolation), but they should bear fruit.

The TSX had a particularly rough Friday because oil stocks plunged nearly 10% as a barrel of WCS flirted with $5. Real estate was the only sector in the green with Dream Office REIT jumping 7.13%. Retirement homes like Sienna (up 4.46%) enjoyed a lift. In contrast, energy names like Pembina lost nearly 18%. In the States, tech took a hit with Apple shedding over 4%, while travel stocks continued to bounce with American Airlines falling 10.34%. The consensus on the street is to wait for a further downturn, hold cash and flock to gold (down slightly today). However, the only graph that matters now is the number of new COVID-19 cases in America, as in #flatlinecurve.