By Mike Keerma
The main North American stock indices remained subdued last week as
investors digested cabinet shuffles in the Trump administration, rising
global trade tensions, and expectations of a rate hike by the U.S. Federal
Reserve next week. The
S&P 500 Composite Index slipped 1.2% on the week, while the
Nasdaq Composite Index edged down 1.0%. Canada’s benchmark
S&P/TSX Composite Index, however, staged a 1.0% weekly advance as
crude oil strengthened on Friday, boosting energy shares and helping support the
Gold remained flat, slipping a 0.7% on the week.
Markets remained nervous about U.S. President Donald Trump’s seeming
revolving door cabinet shuffles, as Secretary of State Rex Tillerson was
summarily shuffled out of his post via a Twitter-delivered pink slip, with
CIA director Mike Pompeo nominated to replace him. Meanwhile, well-known
economist and commentator Lawrence Kudlow accepted the position of director
of the National Economic Council, making him one of President Trump’s key
A push by the Trump administration for tariffs on a wide variety of goods
including steel and aluminum, directed mostly at China, raised some concern
of global trade friction, but did not appear to be a main driver of market
sentiment. Instead, traders focused more on the potential for increased
hawkishness at the Fed, as the central bank is expected to become more
aggressive in dealing with the combined impact of the Trump tax cuts and
increased government spending in stimulating economic growth. Marking this
turn, the University of Michigan’s consumer sentiment index in March rose
to 102 in March from 99.7 in February, its highest level since 2004.
There were no surprising economic data releases during the week to set
markets into a tizzy, so sentiment remained slightly negative, mainly on
those political concerns and a consensus that the Fed under new Chairman
Jerome Powell will embark on a series of at last three 25 basis-point rate
hikes this year, beginning with its March 21 announcement.
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