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Market wrap June 9, 2017: Tech slide sours sentiment
10/21/2017 6:17:34 AM
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By Fund Library News Wire  | Friday, June 09, 2017


 

By Mike Keerma

* Market wrap: Tech slide sours sentiment.
* Dynamic Funds backs off some mergers.
* Horizons changes name of marijuana fund.

U.S. stock markets retreated on the week, as the tech sector took a beating, with some of the biggest tech names fell suddenly on Friday, driving down the Nasdaq Composite Index -1.8% in Friday’s session, to book a -1.6% loss on the week. While not as exposed to the tech sector as Nasdaq, the S&P 500 Composite Index nevertheless lost nearly 1% on Friday and closed the week down -0.3%. Toronto’s benchmark S&P/TSX Composite Index, however, overcame weakness in crude oil and posted a 0.2% advance on the week, driven by gains in the financial sector on strong jobs growth in May, surging industrial capacity, and the potential for a rate hike by the U.S. Federal Reserve Board next week.

Sliding U.S. technology stocks led a market decline on Friday, as some of the biggest names lost ground, including market darlings Apple Corp. (NASDAQ: AAPL) and Nvidia Corp. (NASDAQ: NVDA). Historically low levels of implied volatility measured by the CBOE Volatility Index (VIX) indicated a high level of complacency among investors, as the index dipped to a low of 9.37 last week, its lowest point since 1993. That changed suddenly on Friday as the index rose sharply, to 11.29, an increase of 11%, closing the week at 10.7.

In Canada, employment increased by a much better than expected 55,000 new positions in May, up from a lacklustre 3,200 gain in April, with the job growth came in full-time employment. Also buoying investor sentiment was an increase in Canada’s industrial capacity utilization rate, to 83.3% in the first quarter, the highest rate since 2007, as manufacturing surged. Shares of Canada’s big banks rose on the news, getting an additional push by the possibility of the year’s second rate hike by the U.S. Federal Reserve Board when it meets next week.

In company news, shares of retailer Hudson’s Bay Co. (TSX: HBC) dropped over $1.00, or about 10% on Friday, as the company announced plans to cut 2,000 jobs in an effort to save $350 million annually by the end of its fiscal 2018 year. The company also plans to split the Canadian and U.S. department store operations back into two groups. The moves come as the company reported a first-quarter loss of $221 million compared with a loss of $97 million in the year-ago period, and a 3% decline in department store sales.

On the other hand, while high-end retailers languish, Montreal-based discount retailer Dollarama Inc. (TSX: DOL) continues to rake in the profits, posting earnings of $94.7 million ($0.82 per share) in its first quarter. The company sells merchandise priced between $1.00 and $4.00 through its 1,108 stores across Canada, and expects to open 60 to 70 new stores this fiscal year.

FUND NEWS

* Dynamic Funds backs off some mergers. Dynamic Funds said it is withdrawing some previously announced fund merger proposals. These include the following:

* Horizons changes name of marijuana fund. Horizons ETFs Management (Canada) Inc. says it will change the name of the Horizons Medical Marijuana Life Sciences ETF to Horizons Marijuana Life Sciences Index ETF (TSX: HMMJ) effective on or about June 15, 2017. The fund offers direct exposure to North American-listed companies in the marijuana industry. The name change reflects the proposed change in federal law to legalize recreational use of marijuana in Canada, which will allow the ETF to hold a slightly broader and diversified portfolio of marijuana-focused companies beyond those focused solely in the medical marijuana industry.

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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