Scarcity Of Catalysts Likely To Keep Markets Range Bound; Fed Rate Uncertainty Continues To Fuel Anxiety

Portfolio Advisory Group

May 18, 2016

With the exception of the Energy and Materials sectors, Canadian and U.S. equity markets have traded mostly flat over the past month as corporate earnings underwhelmed (see below) and valuations generally remain at the high end of the historical range. Underscoring the recent strength in commodities, we estimate that over 90% of the S&P/TSX Composite Index’s 6.5% YTD gain has come from the Materials and Energy sectors. With a combined weight of 32% of the TSX (vs. only 10% for the S&P500), investors underweight these sectors have largely under performed so far this year.

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