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Monthly Market Update – March 2015

By Isaac Schweigert | April 2, 2015

An overview of March Market Performance, including a March Economic Indicator recap.

All index returns are Total Return (includes reinvestment of dividends) and are in Canadian Dollars unless noted.

March 2015 Market Performance

Indexes   Return for March 2015 YTD Return
S&P/TSX Composite -1.88% +2.58%
S&P500 -0.34% +9.82%
MSCI EAFE -0.02% +14.81%
MSCI World -0.09% +12.03%
MSCI Emerging Markets +0.01% +11.84%
FTSE TMX Universe Bond -0.32% +4.15%
JP Morgan Emerging Markets Bond (EMBI) +1.65% +11.55%
Other Market Data Month-end Value Return for March 2015 YTD Return
Oil Price (USD) $47.18 -5.18% -11.43%
Gold Price (USD) $1184.70 -2.34% +0.05%
US 3 month T-bill +0.03% 0.01%* -0.01%*
US 10 year Bond +1.94% -0.06%* -0.23%*
USD/CAD FX rate 1.2666 +1.30% +9.18%
EUR/CAD FX rate 1.3615 -2.69% -3.01%
CBOE Volatility Index (VIX) 15.29 +14.62% -20.36%

*Absolute change in yield, not the return from holding the security.

Market Update

March was mixed for financial markets.

Equities were generally flat for the month. Markets outside North America, led by Germany (up more than 22% in Euro terms), outperformed Canadian and US equities. Equity market volatility both realized and implied rose during the month, but remains lower than at the start of the year.

Bond markets were also mixed. The broad index for Canadian bonds, the FTSE TMX Universe Index, was down marginally. US bonds fared better as investment grade indexes were positive, while lower quality, high yield issues were down. Emerging market bonds were one of the bright spots in the bond market, posting positive returns in excess of 1%.

Commodities continued to struggle. The most widely reported commodities, oil and gold, were down 5.2% and 2.3%, respectively. Most agricultural commodities struggled as well; cocoa and sugar were the standouts down more than 8%. The broad Bloomberg Commodity Index was down 5%.

The Canadian Dollar strengthened vs the Euro but weakened against the US Dollar.

March Economic Indicator Recap

Starting this month we are introducing an Economic Indicator Recap. The Recap will highlight major economic indicators that help investors determine how economies from around the world are performing and what the data might be indicating for the future. We will focus on the largest economies in the world and Canada. Following the recap is a calendar of what is coming in the following month.


GDP growth in Canada for Q4 2014 was +0.6% (+2.4% annualized), slightly above forecast. The Producer Price Index (PPI) report for January was -0.4% (-2.2% year over year), the second negative month in a row, following a string of more than 12 positive months. The balance of trade was sharply lower in January (-$2.5B vs. a forecast of +$0.1B), largely due to the declining price of oil. Building permits and housing starts were also lower than forecast, as was job creation, which pushed the unemployment rate up 0.2% to 6.8%. The Bank of Canada left their benchmark interest rate unchanged at +0.75%, however further economic weakness increases the likelihood of a rate cut at their next meeting on April 15.

February inflation statistics were released on March 20, along with retail sales. The Consumer Price Index (CPI) was +1.0%, below the forecasted +1.25%, helped by low gasoline prices, while core inflation was +2.1%. Core inflation excludes more volatile items such as gasoline, natural gas, fruit & vegetables and mortgage interest. Retail sales were weaker than expected in January, likely due to poor weather in the eastern half of Canada. At month-end the GDP report for January was released, and indicated s a slight economic contraction.


The U.S. unemployment rate dropped 0.2% to 5.5% in February and non-farm payrolls rose more than forecast. Retail sales were weaker, declining -0.6% for February, but were up 1.7% for the last 12 months. PPI was also down for February and for the last 12 months, however the forecast had been for a slight rise. Consumer sentiment remains at levels not seen in over a decade but was weaker than forecast.

On the housing front, building permits were up, however housing starts were lower than expected, most likely due to the poor weather during the month of February. However, sales of existing homes continued to rise, and was up 12% compared to a year ago. Inflation in the U.S. was +0.2% in February (0.0% year over year “yoy”), while core inflation was +0.2% (+1.7% yoy).

The U.S. Federal Reserve left its benchmark interest rate unchanged at +0.25% and modified its policy statement slightly, which many Fed watchers interpreted as a willingness to raise interest rates more quickly in the future than previously anticipated.


Eurozone unemployment in January was unchanged at 11.4% (early report was 11.2%) and the early read on February’s number is 11.3%. Retail sales continued to strengthen, rising 3.7% – a growth rate not seen since 2005-2006, and a surprise to many. GDP growth remained slow, but positive, for Q4 2014 at +0.3%. Inflation in the Eurozone remains low; February’s reading of +0.6% for the month is a good sign, but the comparison from a year ago was -0.3%.

The ECB left their benchmark interest rate unchanged at +0.05%, while a number of other central banks in Europe such as Denmark, Sweden and Switzerland (countries not on the Euro) took their benchmark interest rates further into negative territory to help prevent their currencies from appreciating strongly against the falling Euro. The ECB also expanded its quantitative easing program, buying bonds on the open market from Germany, Italy, Belgium and France.


Like in the Eurozone overall, German retail sales were strong in January at +2.3%, and up 5.0% compared to January 2014. February retail sales were a little weaker following the strong performance in January. Factory orders were weaker than expected at -3.9%, but this statistic oscillates a lot so a decline is not that concerning. Inflation for February was +0.9%, and +0.1% for the last year, both up from negatives (deflation) the previous month.

The widely watched ZEW Economic Sentiment Index (a survey of 350 financial and economic analysts) continued its rise, hitting 53. Unemployment in Germany continued its decline in February and now stands at 4.8%.


China’s balance of trade set a new record in February at over $60B, as imports declined more than exports. Inflation in February ticked up from low levels to +1.2%, or +1.4% when measured over the last year. Retail sales in China continued their multi-year trend of slower growth, but still outpaced all developed countries at +10.7%.


Japan’s Coincident and Leading Composite Indexes rose in January, providing support for forecasts of continued economic growth, while Q4 2014 GDP growth came in weaker than expected at +0.4% (+1.5% compared to a year ago). Consumer confidence rose in February, but remains below historically high levels seen in 2004-2006 (and the late 1980s).

Like most central banks, the Bank of Japan left its benchmark interest rate unchanged (at zero). Japan’s trade deficit continued to shrink in February. At -¥425B, the trade deficit was at its lowest since the Fukushima disaster when it set a record of -¥2795B. In case you forgot, the last time Japan posted a sizeable trade surplus was in 2011. Inflation, or lack thereof, remains an issue in Japan. The inflation rate for February was -0.2%, or +2.2% yoy, which includes an increased sales tax in April 2014.

April Economic Calendar

Canada US Eurozone & Germany China & Japan
GDP N/A April 29 N/A April 14 (China)
Consumer Inflation (CPI) April 17 April 17 April 15 (Germany), April 17 (Eurozone-March), April 29 (Germany-April est.), April 30 (Eurozone-April est.) April 9 (China), April 24 (Japan)
Producer Prices (PPI) April 30 April 14 April 7 (Eurozone), April 20 (Germany) April 9 (China)
Purchasing Manager Index (PMI) April 6 April 6 (Markit & ISM) April 1 (Eurozone & Germany, April 24 (Germany-April est.) April 2 (China-March), April 22 (Japan-April est.), April 30 (China-April)
(Un)employment April 10 April 1 (ADP), April 3 (Non Farm Payrolls, UE rate) April 30 (Eurozone & Germany) N/A
Interest rate decision April 15 April 29 April 15 (Eurozone) April 7 (Japan)
Retail Sales April 17 April 14 April 2 (Germany), April 8 (Eurozone) April 14 (China), April 27 (Japan)
Consumer Confidence N/A April 29 April 22 (Eurozone), April 29 (Germany) April 16 (Japan),
Housing Market April 9 (Permits & Prices), April 10 (Starts) April 16 (Starts & Permits), April 22 & 23 (Sales) N/A April 17 (China), April 29 (Japan-Starts)
Leading Indicator N/A April 21 N/A April 5 (Japan-Feb. est.), April 21 (Japan-Feb. Final)
Balance of Trade April 2 April 2 April 9 (Germany), April 15 (Eurozone) April 12 (China), April 21 (Japan)
Other April 21 (Germany-ZEW survey), April 24 (Germany-IFO survey)

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Isaac Schweigert

Isaac Schweigert

Isaac is a CFA charterholder and is Portfolio Manager and Chief Compliance Officer at ModernAdvisor. He has over 11 years of investment industry experience, including asset allocation, portfolio management, due diligence, compliance and reporting.