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Weekly market wrap Aug. 3, 2018: U.S. jobs report, low unemployment help buoy markets
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By Fund Library News Wire  | Friday, August 03, 2018


By Mike Keerma

The U.S. economy added 157,000 new jobs in July, quite a bit less than the consensus expectation of 200,000-plus. Still, the U.S. unemployment rate ticked down to a near 20-year low of 3.9%, even as hourly wages stagnated. These data held out a faint hope that the Federal Reserve might just delay its expected September rate hike, which juiced market sentiment a bit at the end of the week. Even a 7% widening of the U.S. trade deficit in June and rumors of more tariffs by China wasn’t enough to cool investors’ ardor for equities. Symptomatic of that fresh interest in the risk-on trade was the upside on shares of Apple Inc. (NASDAQ: AAPL) following Tuesday’s bubbly earnings release, which pushed the storied maker of all things “i” to a market capitalization of over US$1 trillion, the first company in U.S. history to break the “t” barrier. The S&P 500 Composite Index gained 0.8% on the week as a consequence, while the Nasdaq Composite Index advanced 1.0%. Toronto’s S&P/TSX Composite Index edged up only 0.2% on the week, as investors didn’t find anything much appealing in either the financial or energy sectors. Crude oil dropped 0.5% on the week, while gold continued its year-to-date slide, with a loss of 0.8% on the week.


* Horizons to offer ETFs with 0% management fee. Horizons ETFs Management debuted its Horizons Conservative TRI ETF Portfolio (TSX: HCON) and Horizons Balanced TRI ETF Portfolio (TSX: HBAL), which invest exclusively in Horizons TRI ETFs and use a total return swap investment structure designed to deliver returns in a low-cost and tax-efficient manner. Both HCON and HBAL use an asset allocation strategy that is rebalanced semi-annually.

While the two ETFs are not subject to any topline management fees or operating costs, there are indirect management fees on the underlying Horizons TRI ETFs held by HCON and HBAL, which does give the funds an management expense ratio (MER). Based on the initial portfolios, the total MERs of HCON and HBAL will be 0.15% and 0.16%, respectively, and will not exceed 0.17% and 0.18%, respectively, as at any rebalance.

* WisdomTree launches new Japan and China ETFs. WisdomTree Asset Management Canada, Inc. launched its WisdomTree Japan Equity Index ETF (TSX: JAPN) and the non-hedged units of the WisdomTree ICBCCS S&P China 500 Index ETF (TSX: CHNA.B).

The WisdomTree Japan Equity Index ETF tracks the WisdomTree Japan Equity Index CAD, with exposure to dividend-paying stocks within Japan and traded on the Tokyo Stock Exchange that derive less than 80% of their revenue from sources in the Japanese market. By excluding companies that derive 80% or more of their revenue from Japan, the index is tilted towards companies with a more significant global revenue base. The hedged version of the fund (JAPN.B) is designed to provide exposure to Japanese equity markets, while neutralizing exposure to fluctuations of the Japanese yen movements relative to the Canadian dollar.

The WisdomTree ICBCCS S&P China 500 Index ETF tracks the S&P China 500 Index CAD of the largest 500 eligible companies from the broader S&P Total China BMI Index, representing the entire universe of Chinese companies, including A-Shares and offshore listings that meet eligible criteria. The underlying Index is weighted about 48.5% to China A-Shares as of June 30, 2018.

* Horizons debuts active EM bond ETF. Horizons ETFs Management launched its Horizons Active Emerging Markets Bond ETF (TSX: HEMB), which invests primarily in the fixed and floating rate debt securities of emerging market issuers. The ETF will have global exposure to fixed rate and floating rate instruments issued by sovereign, quasi-sovereign, supranational, and corporate issuers. All U.S. dollar currency exposure is hedged back to Canadian dollars.

* First Asset government bond ETF commences trading. First Asset Investment Management Inc. debuted its First Asset Enhanced Government Bond ETF (FGO: TSX), investing primarily in government debt, but may also invest in other debt instruments across the credit spectrum including cash, corporate debt, and debt and credit derivatives. U.S. dollar units trade under the FGO.U.

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.


© 2018 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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