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Sector Scopes February 2024 Update & BMO Equal Weight Banks Index ETF (ZEB.TO)

The last few days have been mixed for world equity markets. After underperforming for much of the last year, Chinese markets have finally started to rebound a bit after getting help from a Chinese interest rate cut and other stimulus measures. Canada, Australia, and many European countries have also had a good week, posting gains of 2-4%.

On the other hand, while the S&P has continued to trade near the 5000, US indices have been pretty much flat, and the NASDAQ is actually down slightly over the last week. This suggests that the engine which has been pulling equities higher may be running out of steam.

Particularly troubling is that starting last Friday and continuing after traders returned from the long weekend, US markets have been backsliding in the absence of new news to support the rally now that earnings season is pretty much over.

Sector performance has been fairly balanced with six groups posting gains, led by Energy, and five groups posting declines, particularly Technology. Year to date, only three out of eleven groups are in the green, Health Care, Industrials and Technology. The other eight groups are down year to date with Materials, Real Estate, Consumer Discretionary and Consumer Staples turning in the relatively weakest performances.

We are now moving into the last week of February, with an extra day this month for Leap Year. The main economic events are flash PMI reports today, and Manufacturing PMI reports next Friday. In between there are a number of US housing market numbers and GDP updates for the US and Canada.

On the earnings side, the main event is earnings week for Canadian Banks for the quarter which ended January 31st. On the traditional banking side of their businesses, investors may focus in on economic commentary for indications of whether Canada is in a recession or bouncing around zero, and the current state of the US economy for those with sizeable stateside operations. It was a very strong quarter for stock markets, which could have a positive impact on capital markets and wealth management divisions.

In this edition of Equity Leaders Weekly, we take our monthly look at Sector Scopes and at recent trends in the Canadian banking sector ahead of next week’s earnings reports.

Sector Scopes February 2024 Update

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