The Canadian stock market rebounded sharply in 2009 with a gain of 35.1% as measured by the S&P/TSX Composite Index. There was an almost perfect inverse ranking relative to 2008 of the best-to-worse performing sectors of the Canadian stock market. Two of the three best performing sectors were from index heavy-weights financial services (30.5% index weighting) and energy (27.6%. The three worse performing groups were Telecommunication Services, Consumer Staples and Consumer Discretionary.
The Canadian economy appears to have recovered in or around mid-year, although evidence remains mixed about the breadth and strength of the recovery. Indications exist of a slow, steady, unspectacular, improvement in the economy through 2010 driven by improvements in inventory investment, consumer spending, business equipment spending and export growth.
Consensus estimates call for 24.8% and 17.9% growth in earnings for the S&P/TSX Composite Index for calendar 2010 and 2011. More specifically, growth is strong across all ten sectors.
Where 2009 was a year of extremes - extreme pessimism by some investors, extreme market lows, extremely low valuations etc., 2010 is likely to be a year of relatives. The fiscal and monetary stimulus committed by governments and central banks around the world managed to steer the global economy away from what could have been a much deeper and prolonged recession. Relatively speaking however, the U.S. and Canadian economic recoveries will be slower than what we have seen coming out of prior recessions. That is, where a typical recovery would see economic growth in the quarters that follow a recession in the range of 5% - 12% annualized, we are likely to see growth in the U.S. in 2010 of 3% - 4% with similar results in Canada. __________________________________________________________________ The statements of fact in this report have been obtained from and are based upon sources Investment Management Services believes to be reliable, the information contained herein is neither all-inclusive nor guaranteed by Investment Management Services and is subject to change as market and other conditions warrant. This report is for information purposes only and is not intended to convey specific investment advice or as an offer or solicitation with respect to the purchase or sale of any individual investment.