The Fund Library :: Columns :: Weekly market wrap Dec. 1, 2017: Indices edge down on Washington volatility contagion

By Mike Keerma

* Stock indices edge down on Washington volatility contagion.
* Bank profits soar.
* Manulife re-opens flagship fund.
* Manulife launches two multi-factor ETFs
* Horizons debuts robotics ETF.

* Stock indices edge down on Washington volatility contagion. The major North American stock indices turned in mixed results last week, as turmoil in Washington, DC on Friday infected markets on Friday and resulted in selloffs and losses on the day for all the main market gauges. The blue-chip S&P 500 Composite Index was the only benchmark to advance on the week, gaining 1.5%. Toronto’s S&P/TSX Composite Index drifted down 0.4% through the week, as strong bank earnings and a positive jobs report failed to overcome slipping crude oil, which lost 1.1% on the week. The Nasdaq Composite Index also fell 0.6% on the week.

According to unverified news reports, President Trump’s former national security advisor Michael Flynn has pled guilty to lying to FBI agents and has agreed to cooperate with special counsel Robert Mueller on the probe into possible Russian influence in the 2016 election. That resulted in a Friday selloff, which was partially offset by news from U.S. Senate Republicans saying they had enough votes to pass the Administration’s massive tax-reform bill.

In Canada, the economy created 79,500 jobs in November, far exceeding economists’ estimates, and pushing the unemployment rate down to 5.9% in the month. In addition, those strong employment gains helped the real gross domestic product grow at an annual 3.0% rate in the third quarter, though the quarter-over-quarter growth came in at 1.7%, a marked, but expected, slowdown from the blistering 4.3% quarterly rate logged in the second quarter.

* Bank profits soar. Several of the big Canadian banks reported fourth-quarter and full year earnings this week, and the news was generally pretty good, as profits surged for the both the quarter and the year.

Toronto-Dominion Bank (TSX: TD) posted net income of $2.7 billion ($1.42 per share diluted) for the quarter compared with $2.3 billion ($1.20 per share diluted) in the same quarter last year. For the full year, TD reported net income of $10,517 billion ($5.50 per share), compared with $8.9 billion ($4.87 per share) in 2016.

Canadian Imperial Bank of Commerce (TSX: CM) reported net income of $1.2 billion ($2.59 per share diluted) for the quarter compared with $931 million ($2.32 per share diluted) in the same quarter last year. For the full year, CIBC reported net income of $4.7 billion, compared with $4.3 billion in 2016.

Royal Bank of Canada (TSX: RY) reported net income of $2.8 billion ($1.88 per share diluted) for the quarter, up 12% from the same quarter last year. For the full year, RBC reported net income of $11.5 billion ($7.56 per share), up 10% from 2016.

FUND NEWS

* Manulife re-opens flagship fund. Manulife Investments announced it will re-open its Manulife Monthly High Income Fund and the related Manulife Monthly High Income Class and Manulife Canadian Balanced Private Pool to new investors on or about January 2, 2018. The funds had been capped in August 2015 due to capacity. In a release, Manulife said, “The portfolio managers consider the funds are no longer at a size that would impact their ability to manage assets in line with their disciplined investment approach.”

* Manulife launches two multi-factor ETFs. Two new Manulife multifactor ETFs began trading on the TSX last week. Manulife Multifactor Canadian SMID Cap Index ETF (TSX: MCSM) and Manulife Multifactor U.S. Small Cap Index ETF (TSX: MUSC.B) are sub-advised by Dimensional Fund Advisors Canada using their multifactor approach and Dimensional’s proprietary technique

* Horizons debuts robotics ETF. Horizons ETFs Management launched its Horizons Robotics and Automation Index ETF (TSX: ROBO) last week. It’s the first Canadian ETF to offer global exposure to the robotics and automation industry. The fund tracks the roughly 80-stock globe-spanning ROBO Global Robotics and Automation Index, which provides exposure to robotics- and/or automation-related companies. Horizons ROBO will mainly hold stocks of issuers in the Index and will seek to hedge its U.S. currency exposure to the Canadian dollar.

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Disclaimer

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.