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Markets: By the numbers
Monday’s North American close
13,358.39 -19.94 -0.15%
15,783.10 +21.32 +0.14%
1,771.89 +1.28 +0.07%
3,919.79 +0.56 +0.01%
Decent jobs growth, encouraging words from central bank officials and healthy earnings numbers were enough to push North American stock markets strongly higher yet again last week.
The question is whether it will continue.
The benchmark S&P/TSX composite index gained 84.13 points on Friday to close at 13,378.33 as investors took heart in Canadian jobs figures that breezed past expectations.U.S. indexes also took off as employment numbers south of the border also showed encouraging signs of an improving economy. The Dow Jones industrials surged 167.8 points to 15,761.78, the Nasdaq climbed 61.9 points to 3,919.23 and the S&P 500 index rose 23.46 points to 1,770.61.
Related: Canada’s jobs growth steady as she goes – Financial Post
While the short-term picture in North America continues to improve, signs of falling prices have begun to raise concerns that central banks will continue to pump money into the global economy to avoid deflation. The European Central Bank last Thursday surprised financial markets by lowering its benchmark rate a quarter point to a record low and signalling it would keep it there indefinitely, while Federal Reserve officials continue to indicate their unprecedented US$85-billion a month bond-buying will remain in place, despite talk earlier this year of starting to taper it.
Deflation is viewed as bad for economic growth because it puts pressure on what people and companies owe by reducing the amount of spending power they have to pay back their debts, in turn reducing spending. It also encourages putting off spending on expectations that prices for goods and services will be lower in the future.
With a relatively quiet week on the economic calendar and the bulk of third-quarter earnings announcements past, investors will be looking for fresh signs of whether the equity market rally will continue or take a breather, particularly with testimony from Fed Vice Chair Janet Yellen Thursday during her confirmation hearing before the Senate Banking Committee. Yellen has been nominated to replace Fed Chairman Ben Bernanke when his term expires in January.
Related: Get ready for great stagnation under Yellen Fed – Financial Post
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Here’s what to watch for this week:
Monday: Bond markets in Canada and the U.S. are closed in observance of veteran’s day, though stock markets will be open. No economic releases are on tap, though details from China’s 3rd Plenum of the 18th Communist Party of China (CPC), where crucial fiscal and economic reforms are expected to be announced, will likely garner attention.
Tuesday: No economic reports in Canada again; in the U.S., the NFIB Small Business Economic Trends Survey for October will be released at 7:30 am ET, followed by ICSC Same-Store Sales for the week ended November 9 at 7:45 am ET.
Wednesday: No economic reports on tap in Canada or the U.S. again, though the Treasury will release its October budget figures at 2 pm ET. Macy’s Department Stores will release its quarterly figures.
Thursday: In Canada,September’s merchandise trade balance and new housing price index will both be released at 8:30 am ET. In the U.S., initial jobless claims for the week ended November 9, third-quarter productivity figures and September’s goods and services trade balance will all be unveiled at 8:30 am ET. The U.S. Senate Banking Committee will hold a hearing on the nomination of Janet Yellen for Fed Chair starting at 10 am ET. Nordstrom, Kohl’s and Wal-Mart will reveal their quarterly earnings.
Friday: Reports on Canadian manufacturing sales and orders and new motor vehicle sales in September will be released at 8:30 am ET, followed by existing home sales and the MLS home price index in October at 9 am ET. In the U.S., October trade price indices and November’s Empire State manufacturing survey will be released at 8:30 am ET, followed by industrial production and capacity utilization numbers for October at 9:15 am ET and September wholesale trade figures at 10:00 am ET.
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