Canadian investors choosing EM over U.S. equities

In February, Canadian investors rotated assets out of U.S. equities and into emerging market opportunities, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly market commentary.

Over the same period, he adds, U.S. investors added notably to their Canadian equity holdings. However, following the breakdown of OPEC talks, the TSX is likely to come under pressure.

More highlights

• The breakdown of recent OPEC talks will negatively impact the TSX. Interestingly, ahead of the meeting this past weekend, money managers had kept bullish bets on oil near nine-month highs. But some of these will undoubtedly be unwound in the near term.
• The TSX built some positive momentum last week, but this will likely slow as energy shares wilt. However, any pullback in energy will lead some investors returning to the safety of gold, which will add to the strong performance of materials names and minimize some of the downside moves on the TSX. Read: Once again, it’s gold time to shine
• Expect oil price weakness to result in a reversal of some positions on the Canadian versus the U.S. dollar, even though the loonie had been gaining strength following the BoC’s decision to hold rates and reduce expectations for additional cuts last week. Read: BoC’s optimism signals opportunties for equities.
• This week, wholesale trade and inflation data points will headline the domestic economic releases.
• Earnings seasons is well underway. But, analyst expectations have been revised lower over the last few months in light of strong U.S. dollar and weak international economic developments. Read: Auditor liability to investors is changing.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.