Markets Make Gains Despite Trade Issues

Despite Q3 market volatility sparked by ongoing trade issues, and decelerating global growth, global equity markets finished the period generally positive.

10.24.2019 - Ian Riach, Chief Investment Officer

Despite some downward volatility at July’s end and into August, global equity markets finished the quarter generally positive. North American indexes led the way while emerging market equities suffered with negative returns. The Canadian bond market posted small gains for the period as government and corporate issues contributed to positive returns.

Once again, trade-related issues sparked the quarter’s volatility. The United States and China continued their battle on tariffs and the drama surrounding Brexit heated up as Prime Minister Boris Johnson suspended the United Kingdom parliament, only to have the Supreme Court overturn his decision. Hopes that the United States and China will reach a deal by year’s end seem to be fading and it looks likely that Britain will enter an election over Brexit.

In the face of trade concerns, global growth continued to decelerate and leading economic indicators were particularly concerning this quarter. For instance, the Institute for Supply Management’s Manufacturing Index fell below 50 in the United States, indicating a contraction in activity.[1] Germany’s report that its second quarter GDP contracted was also worrisome. As Europe’s largest economy, the decline seemed to cast a pall on investor sentiment across the eurozone. Though China’s growth remained above that of the western world, the pace there also decelerated. The International Monetary Fund noted that country’s growth for 2019 is expected to be 6.2%, down from previous forecasts of 6.5% and lower than the 6.6% registered in 2018.[2]

In response to economic data, we saw easing moves from the US Federal Reserve and the European Central Bank, as well as from other smaller central banks, especially in emerging markets. Last quarter, we mentioned that the effectiveness of further easing may be waning and fiscal stimulus from governments may be necessary to prolong the expansion. However, we think conditions will have to deteriorate further for governments to introduce such measures.

Canada bucked the trend somewhat this quarter with better economic data and one of the best performing major stock markets, in local currency terms. Gains were broadly based, with only the Health Care sector noticeably declining due to weakness of cannabis-related companies. The Bank of Canada remained on the sidelines and continued with a more neutral bias, although highlighting downside risks to the economy. These downside risks may well test the Bank should trade uncertainties continue and Canada’s economy begins to suffer as a result.



Market Performance (%)Q3 20191-Year
S&P/TSX Composite Index 2.5% 7.1%
S&P 500 Index (CDN$) 2.8% 6.7%
MSCI EAFE Index (CDN$) 0.1% 1.5%
FTSE TMX Canada Universe Bond Index 1.2% 9.7%
CDN$ Versus US$ -1.1% -2.5%

The above Index reviews are calculated from external sources and, where applicable, reflect total returns. All figures are in Canadian dollars and are as at September 30, 2019.






1. Institute For Supply Management Report, October 3, 2019.
2. “IMF Executive Board Concludes 2019 Article IV Consultation with the People’s Republic of China,” International Monetary Fund, Press Release No. 19/314, August 9, 2019,


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