Year End Market Outlook

“The stock market climbs a wall of worry” best describes the United States (US) stock indices for 2017.  Since the start of the years as an investor you keep hearing threats in the press of a major market sell off is ahead because of high P/E ratios (Price to Earnings), rising interest rates, slow economic growth, and the continued challenges for the Trump Administration.  Yet the US markets keep moving ahead, but as a Canadian the strong C$ (Canadian dollar) has offset a lot of the 2017 US rally.

 

The C$ has started to weaken and will probably continue to do so for the next 3 to 6 months which will help enhance the returns in US investments as we go into  year-end and start 2018. Historically the next 6 months are seasonally the best 6 months of the year for stock markets globally. I expect most markets to rally as global economic growth remains strong and most central banks remain very accommodating when it comes to credit and interest rate policies.

 

The Canadian stock market has been one of the weakest over the past year due to weak commodity prices, rising interest rates and a strong C$. These factors have all started to reverse and I expect to see that trend continue.  Stronger global economic growth has provided support to commodity prices recently, while the Bank of Canada has recently paused on its rising interest rate policy.  Since this change by the Bank of Canada the C$ has weakened and as I already have stated should continue to do so for the next 3 to 6 months. Based on these changes I expect the Canadian Stock market to show decent strength as markets globally continue to rise.

 

In summary I expect stock markets globally to continue to move up while interest rates remain very low.  The C$ has some downside pressure on it which is good for Canadian exporters. We are basically fully invested with a conservative bias and will probably stay that way for the foreseeable future.

 

As always, if you have any questions or comments please contact me at 780-=944-2690 or b.achtymichuk@holliswealth.com.

 

Best Regards

 

 

 

Bill Achtymichuk, CIM, FSCI, CFP®

Portfolio Manager

Investment Advisor, Director, Private Client Group