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Market wrap March 31, 2017: Stocks post Q1 gains but fade in March
8/22/2017 4:47:45 PM
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By Fund Library News Wire  | Friday, March 31, 2017


 

By Mike Keerma

* Stocks post Q1 gains but fade in March.
* Horizons launches medical marijuana ETF
.
* Federal budget puts some fund mergers on hold.
* Dynamic proceeds with fund mergers.


Solid economic growth, on-target inflation rates, and positive earnings estimates propelled North America’s major market indices to solid gains in the first quarter of 2017. Despite lofty stock valuations, investors bet that the Trump Administration would cut corporate taxes and relax some of the regulatory overeach that was characteristic of the Obama Adminstration, particularly in energy and healthcare. So for the first quarter at least, stocks posted solid gains south of the border, as the S&P 500 Composite Index advanced 5.5%, despite flattening out in March. Propelled by strong gains in the IT sector, the Nasdaq Composite Index gained nearly 10% in the first three months, with a 1.5% advance in March. Toronto’s S&P/TSX Composite Index lagged somewhat, posting a 1.7% first-quarter gain, buoyed by strength in the financial sector. Crude oil dropped -5.8% in the quarter, while gold gained 8.2%.

While few of the Trump Administration’s promised reforms have actually come to pass, investors seemed willing to place a higher value on potential future earnings in the expectation that at least some would. Still, while the indices posted robust returns in the first quarter overall, performance in March flattened out as investors pondered the effect that the failure of Trump’s major healthcare overhaul bill might have on similar iniatives, like corporate tax cuts, in the next few months.

However, U.S. consumer sentiment continues to soar, as the University of Michigan’s consumer sentiment index stood at 96.9 in March. In addition, the early Chicago March Manufacturing Purchasing Managers Index rose to 57.7 from 57.4 in February, indicating growth in the manufacturing sector. And with one rate increase this year already under its belt, many observers are betting on possibly two more rate hikes by the U.S. Federal Reserve Board, especially if inflation, wage growth, and employment rates continue to meet the Fed’s target ranges.

In company news, Calagary-based Cenovus Energy Inc. (TSX: CVE) saw its share price dip precipitously last week as it announced a $17.7 billion purchase of U.S. energy major ConocoPhillips Inc.’s (NYSE: COP) Canadian energy assets inclulding oilsands and conventional oil-and-gas operations in Western Canada. The announcement shaved nearly 14% off Cenovus’ share price last week, while adding nearly 9% to ConocoPhillips.

FUND NEWS

* Horizons launches medical marijuana ETF. Horizons ETFs Management says it has filed a final prospectus to launch the Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ), which is slated to begin trading on April 5. The ETF aims to track the North American Medical Marijuana Index, a basket of stocks of North American companies in the marijuana industry. In a release, Horizons said that stocks must meet minimum asset and liquidity thresholds to be included in the index, which will be rebalanced quarterly on a market-capitalization basis. Individual holdings will be capped at a 10% weighting.

* Federal budget puts some fund mergers on hold. As a result of certain tax provisions in the March 22 federal budget, several fund companies have announced revisions to previously announded plans to terminate and merge certain funds. These include LOGiQ Asset Management Ltd. and Investors Group.

* Dynamic proceeds with fund mergers. Dynamic Funds, which is a division of 1832 Asset Management LP, announced a spate of fund mergers, to take effect June 30 on regulatory and unitholder approvals, as follows.

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

@FundLibrary – Follow Fund Library on Twitter for daily information and updates.

Disclaimer

© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
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