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Market wrap April 28, 2017: Upbeat earnings spur U.S. markets, while TSX lags
7/24/2017 12:51:52 PM
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By Fund Library News Wire  | Friday, April 28, 2017


 

By Mike Keerma

* Upbeat earnings spur U.S. markets, while TSX lags.
* Mackenzie adds to income fund lineup.
* Front Streeet proposes fund merger.

* Upbeat earnings spur U.S. markets, while TSX lags. U.S. stock markets closed Friday noticeably higher on the week, as first-quarter earnings reports continued to exceed analysts’ estimates, especially among technology stocks, where both Alphabet Inc. (NASDAQ: GOOG) and Amazon.com Inc. (NASDAQ: AMZN) reported street-beating earnings. In addition, markets were buoyed by the prospect of personal and corporate tax cuts announced by President Donald Trump on Wednesday. The S&P 500 Composite Index advanced 1.5% on the week and 1% on the month. The tech-weighted Nasdaq Composite Index advanced 2.3% on both the week and the month. Toronto’s S&P/TSX Composite Index shaved a hairline 0.2% on the week as the financial sector lost ground on investor anxiety over troubled mortgage lender Home Capital Group Inc. (TSX: HCG). The Index gained only 0.3% in April overall, while crude oil and gold prices slipped on the week, with crude oil prices sliding -3.0% during the month.

GDP reports showed that economic growth softened in both Canada and the U.S. In Canda, Statistics Canada reported 0% month-over-month growth in February GDP as manufacturing faltered in the month. Year-over-year, however, February GDP posted 2.5% growth.

In the U.S. first-quarter GDP grew 0.7% from the fourth quarter of 2016, for year-over-year growth of 1.9%, as lagging consumption and growing inventories weighed on growth. The soft growth continues a string of weak first-quarter results for the past several years, with a rebound in GDP growth expected in the second quarter.

In business news, shares of Canadian mortgage lender Home Capital Group Inc. (TSX: HCG) plunged last week as $762 million in deposits were withdrawn from its Home Trust Co. subsidiary. The company’s main business is providing uninsured mortgages to borrowers who cannot obtain loans from the major banks. It also offers consumer deposits through its Oaken Financial brand.

The run on the company began last week, following accusations by the Ontario Securities Commission that the company and some of its executives had misled shareholders over fraud it had discovered in its brokerage channels two years ago. On Thursday, the company obtained a $2-billion line of credit from the Healthcare of Ontario Pension Plan to bolster the company’s balance sheet, at an effective 22.5% interest rate. Analysts are concerned that it won’t be enough to keep the company alive, and apparently neither are investors, as share price plunged 65% on Wednesday, to about $6.50 from Tuesday’s close of $17.09, and closed Friday at $8.04.

FUND NEWS

* Mackenzie adds to income fund lineup. Mackenzie Financial Corp. debuted two new mutual funds and one ETF that is says are “designed to generate income and improve portfolio diversification.”

Mackenzie US Strategic Income Fund invests primarily in U.S. dividend paying equities and a diversified portfolio of fixed-income securities, including high-yield bonds and loans. Foreign currency exposure is actively managed.

Mackenzie Global Credit Opportunities Fund invests in investment-grade and non-investment grade corporate and government bonds, including Emerging Market debt, loans, and preferred shares.

Mackenzie Global High Yield Fixed Income ETF (NEO: MHYB) aims for a steady flow of income with the potential for long-term capital growth. In a release, Mackenzie said, “The manager applies disciplined criteria including rigorous credit analysis, ongoing assessment of relative and absolute valuations to help uncover the most attractive risk-adjusted opportunities within the high yield asset class.”

* Front Streeet proposes fund merger. LOGiQ Capital 2016 and Front Street Mutual Funds Ltd. announced a proposal to merge Front Street Growth and Income Class into Front Street Balanced Monthly Income Class in order to reduce costs and improve diversification, according to a release. Subject to approvals, the Merger is expected to be completed on or about June 16, 2017.

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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