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Weekly wrap July 21, 2017: U.S. indices post weekly gains but back off record highs
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By Fund Library News Wire  | Friday, July 21, 2017


By Mike Keerma

* U.S. stock markets back off record highs.
* BMO shutters income fund.

* Franklin Templeton launches new Canada fund.

* U.S. stock markets back off record highs. A subdued outlook and declining quarterly earnings from General Electric Co. (NYSE: GE) put the brakes on a week-long rally in U.S. stock markets, as the big indices retreated a notch or two in Friday’s session. Still, the S&P 500 Composite Index hit a record high last week and posted a 0.5% gain on the week overall. The Nasdaq Composite Index also posted a record high on Thursday, but retreated on Friday, advancing 1.2% for the week. Toronto’s benchmark S&P/TSX Composite Index also pulled back on Friday as crude oil prices retreated -2.6% on the week, and as Canada’s June inflation rate continued below the Bank of Canada’s target. However, the index was about flat for the week, as energy issues weighed on performance, while stronger retail sales in May helped cushion a futher decline. The retail sales data also gave the Canadian dollar a boost, which closed at US$0.7976 on Friday.

Shares of General Electric Co. slid -3.0% on Friday after the company reported earnings of US$1.19 billion (US$0.15 per share), compared with US$2.76 billion ($0.36 per share) in the same period a year ago. Adjusted earnings per share plunged to US$0.28 cents from US$0.51 a year ago, while revenue slid 12%, to US$29.56 billion. So far this year, shares of GE have dropped about 19%. GE continues to forge ahead with its cost-cutting plan, having cut US$593 million in the second quarter, on its way to saving $1 billion by year-end. In a conference call, outgoing CEO Jeff Immelt reportedly indicated that results from GE’s legacy oil and gas businesses as well as its power business are likely to be softer over the next year.

Canadian energy stocks retreated on Friday, dragging down the S&P/TSX Composite in the process, on fears of increasing crude oil production by the Organization for the Petroleum Exporting Countries (Opec), which has abandoned its much-vaunted production cutting agreement in all but name, as U.S. producers continue to erode Opec’s market share.

Meanwhile, Canada’s May retail sales showed considerable strength, rising 0.6% from April, for a 6.4% annual pace. June inflation, however, remained placid, with the all-items consumer price index dropping to a monthly -0.1%, for a 1.0% annual rate, down from 1.3% in May. The core rate, which excludes volatile items like food and energy notched up slightly, to a 1.4% annual rate, still well below the Bank of Canada’s target 2%. The slow rate of inflation suggests the Bank of Canada’s next rate hike may now be pushed back to October instead of September as has been widely expected following its recent 25-basis-point hike.


* BMO shutters income fund. BMO Investments Inc. announced plans to terminate the BMO Short-Term Income Class on or about Sept. 22, 2017. BMO did not give a reason for closing the fund, but assets of only $2.53 million and consistent fourth-quartile performance over the longer term may offer some clues.

* Franklin Templeton launches new Canada fund. Franklin Templeton Investments debuted its Franklin Bissett Canada Plus Equity Fund. Taking a multi-layered, risk reduction approach, the fund can invest up to 49% of its assets in foreign securities, with a focus on U.S. equities. It may also use equity put option strategies as a measure to mitigate overall volatility. Stocks are selected by managers Garey Aitken and Tim Caulfield using Franklin Bissett’s growth-at-a-reasonable-price (GARP) philosophy.

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.


© 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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