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 ETF Country Heat Map & Sector Scopes Monthly Review April 2024

Selling pressure against equities around the world has intensified as we move deeper into April, which can be blamed on a number of factors including three in particular. First of all, treasury yields have been on the rise again, particularly in the US where the 10-year yield (TNX.I) which we highlighted in the April 4th edition of Equity Leaders Weekly, has climbed up above 4.60%. Amid signs from rising commodity prices like oil and copper (which has rallied to its highest level in nearly two years), economic reports that indicate inflation pressures are building once again, and Fed Chair Powell admitting that the US has not made enough progress on inflation to justify interest rate cuts, investors have been pushing out their potential start date for easing with June now pretty much off the table, which has presented a headwind for stocks, particularly in interest rate sensitive sectors. Secondly, earnings season has started and while results have been better than expected for the most part, the market reaction to results and guidance has been very mixed, sparking sharp moves in both directions. It appears that the big equity market gains of the last six months have priced in very high expectations and some investors have elected to view reports as an opportunity for profit-taking. Thirdly, investors appear to be starting to take all of the political and financial risks out there, particularly related to the wars in Ukraine, the Middle East and elsewhere more seriously. This can be seen not only in rising commodity prices but also gains in traditional havens like Gold and Silver. On the flip side, markets that usually benefit from a strong appetite for risk such as cryptocurrencies and small cap stocks, have rolled over and started downward corrections.

Selling pressure has been consistent across geographies and also across sectors as all eleven main industry groups have declined over the last week. Over a month, only Energy and Materials have turned in a positive performance. In the last week, defensive Utilities have declined the least, while Health Care, Technology and Consumer Discretionary are among the deepest decliners. We are now moving into the heart of earnings season with results increasing in number and broadening across sectors, and Canadian results starting to come in. The calendar through the end of next week is dominated by Big Tech, Big Pharma, Big Auto, Big Industry, Big Rail, Big Oil, telcos, credit card companies, miners, manufacturers, restauranteurs and more. The economic calendar is quieter and likely to be overshadowed by earnings but there are a few notable numbers including Flash PMI reports next Tuesday, and the first crack at US Q1 GDP next Thursday. In this edition of Equity Leaders Weekly, we look at the relative performance of equity markets around the world and conduct our monthly review of Sector Scopes.

ETF Country Heat Map

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