SIACharts Logo

Commentary >

 S&P/TSX Capped Real Estate Index (TTRE.I) & iShares PHLX Semiconductor ETF (SOXX)

March went out like a lamb over the last week with the Dow Industrials and the S&P 500 both achieving new all-time highs, while indices which had struggled mid-month, such as the NASDAQ Composite and the Russell 2000, stabilized. A survey of Sector ETFs across North America found many of the charts in consolidation mode with either rectangles or symmetrical triangles forming. Equities currently find themselves in a situation common to the transition between a recession ending and an expansion becoming more established. With last year’s crisis winding down, some of the emergency liquidity brought in a year ago to deal with the COVID collapse are starting to be scaled back. Emergency breaks to US banks on their capital requirements ended yesterday, which appears to have led to a reeling in of some margin lending culminating in the liquidations at Archegos Capital which sparked selloffs in some media companies and banks. Meanwhile, the Bank of Canada has started to hint that it may start to taper its asset purchases in the coming months. This reduction in easy money rocket fuel, and a rotation of capital between equity market sectors may limit the near-term upside for broad indices.

On the other hand, the near-term downside appears limited as well. Recent economic data has been positive, including strong manufacturing PMI reports out of Europe this morning, the Biden Administration just announced a $2.1 Trillion, 8-year infrastructure spending program, and a new earnings season is approaching, providing fundamental support for markets. The fact that Archegos Capital’s margin problems were contained to itself, a couple of its lenders and a few of its holdings and did not spark a wider contagion can be seen as a sign that overall market confidence remains strong.

A flurry of news is due over the next few days including more manufacturing PMI reports today. US nonfarm payrolls come out on tomorrow’s Good Friday holiday so their impact may influence trading more on Monday, and service PMI reports are due early next week. Earnings season doesn’t start for another couple of weeks, but we are into confession season which has been quiet so far.

In this issue of Equity Leaders Weekly, we take a look at two sectors which have been on the rebound lately, real estate and semiconductors.

S&P/TSX Capped Real Estate Index (TTRE.I) 

Keep up to date on the latest financial market news.

Receive a daily newsletter with stock highlights, ETF rankings, weekly market focus and others.