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Market wrap June 23, 2017: Stocks perk up but stay flat on the week
7/24/2017 12:47:54 PM
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By Fund Library News Wire  | Friday, June 23, 2017


 

By Mike Keerma

* Stocks perk up but stay flat on the week.
* Canada’s inflation rate cools in May.
* Buffett snatches up Home Capital from bargain bin.
* Sears Canada now a (below) dollar store.
* Harvest Portfolios debuts global REIT ETF.

* Stocks perk up but stay flat on the week. Stock markets perked up a bit this week, closing with small gains week-over-week, helped along by small gains in the energy sector in Friday’s session as well as continuing momentum among technology stocks. In the absence of any major economic releases and geopolitical imbroglios, stock markets were largely flat on the week. Toronto’s S&P/TSX Composite Indexedged up 0.8% on news of cooling Canadian inflation and a bailout of Home Capital Group (TSX: HCG) by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A), while New York’s S&P 500 Composite Index held steady with a near-invisible 0.2% gain. The Nasdaq Composite Index remained the outlier, with a 1.8% advance on the week, for a 16.4% year-to-date gain, as tech issues sprung back to life last week, ending two weeks of losses for the Nasdaq. Crude oil rose 0.8% on Friday despite traders’ anxieties about a supply glut. With summer trading seasonality starting to kick in, and not all that much for traders to worry about in the market, gold remained virtually flat on the week.

* Canada’s inflation rate cooled in May, as the headline consumer price index dipped to an annual 1.3% rate from 1.6% in April. Sliding gasoline prices contributed to the lower rate. However, even the core rate, which excludes the more volatile energy and food prices, dipped to 1.4% in May, down from the 2% level where it has hovered for the past few months.

* Buffett snatches up Home Capital from bargain bin. Warren Buffett has come to the rescue of Canada’s largest alternative mortgage lender, Home Capital Capital Group (TSX: HCG), at a bargain price. Columbia Insurance Co., subsidiary of Buffett’s investment holding company Berkshire Hathaway Inc. (NYSE: BRK.A), will reportedly acquire $400 million in shares of Home Capital in two private placements, for a 38.39% stake in the company. Home Capital also gets a $2 billion line of credit to its Home Trust subsidiary at an interest rate of 9%, secured by $4 billion in Home Capital mortgages. Home Capital gets cheaper funding, while Buffett gets Home Capital’s steeply undervalued assets at a bargain price.

* Sears Canada now a (below) dollar store. As shares of Sears Canada Inc. (TSX: SCC) sank well below $1.00 this month, the beleaguered department store chain filed for creditor protection under the Companies’ Creditors Arrangements Act (CCAA), which it hopes will give it time to restructure as it closes 59 stores across Canada, and lays off 2,900 employees.

FUND NEWS

* Harvest Portfolios debuts global REIT ETF. Harvest Portfolios Group Inc. launched its Global REIT Leaders Income ETF (TSX: HGR) on Friday. The fund aims for capital appreciation, monthly cash distributions, and lower volatility than by owning the REIT Leaders directly. The actively managed fund invests in equity securities of between 20 and 30 REITs chosen from the REIT Leaders Investable Universe. In a release, Harvest said that it will target lower volatility by writing covered call options on up to 33% of the option eligible portfolio securities. The level of covered call option writing may vary based on market volatility and other factors.

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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