Friday, November 24, 2017

S&P/TSX Composite Index Lags Behind in 2017

The 2017 year is coming to a close and as is the annual tradition, it’s time to start summarising the results of activity on the stock markets during 2017. So far this year, the performance of the S&P/TSX Composite Index (higher by about 5%) has lagged behind its performance from last year (+18%) and this year’s performance of the main American index S&P 500 (which is up about 16% year-to-date). 

The energy sector, which accounts for 19% of the S&P/TSX Composite Index’s total weight, has been the major drag on the index this year. Year-to-date, the S&P/TSX Capped Energy Index has fallen by about 14%, despite the growth of oil prices by more than 7% (WTI Crude). 

The Financials, the biggest sector of the Canadian stock market (37%), have been doing very well lately and the S&P/TSX Capped Financial Index has risen by about 10% since the beginning of the year. But this performance did not lift the S&P/TSX Composite Index much higher as some other market sectors have posted more modest performances. 

For 2018, the Canadian economy is expected to slow its growth as compared to this year. This may slow down the growth of the major Canadian stock index, but many sectors and stocks may well show strong results as investors are more focused on corporate earnings, rather than the general growth of the economy. In fact, stronger GDP growth in 2017 might be helpful for many companies’ corporate profits in 2018.

Ukrainian Credit Union Limited

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