Index Daily Change Weekly Change
S&P/TSX composite index 0.01% Gain 0.10% Gain
Dow Jones industrial average 0.08% Gain 1.01% Gain
Standard & Poor’s 500 Index 0.07% Gain 0.58% Gain
Nasdaq Composite Index 0.10% Drop 0.87% Gain

The Canadian stock market ended little changed on Friday as the sinking of a South Korea naval vessel stoked worries about geopolitical tensions in Asia, offsetting growing confidence over a deal for debt-ridden Greece. News of the ship sinking with more than 100 people on board stirred fears of the possibility of a military confrontation, even though Seoul said it was not clear if North Korea was involved. The incident impacted the stock market just as positive sentiment was building around an agreement that would provide a safety net for Athens as it struggles to cut a giant budget deficit and refinance short-term loans (in order to avoid a default).

Oil prices fell below $80 after data showed the U.S. economy grew less than expected last quarter, and the plan to bail out Greece failed to quell concern over fragile economic recovery.

Within the index 8 of the 10 sectors were lower, but the materials sector rose 1.6%, reflecting firmer gold prices and copper at a 2-week high.

In the United States the Dow and S&P ended flat on Friday, giving back earlier gains after the sinking of a South Korean naval ship, while tech shares’ weakness kept the Nasdaq in slightly negative territory. Stocks initially rose after European Union leaders said they had agreed on a standby aid package for Greece, and after better-than-expected March consumer sentiment data.

The Nasdaq felt the weight of Oracle Corp., which fell from a 9-year high a day after reporting quarterly results that beat expectations.

News of the ship sinking hit sentiment, analysts said, although some analysts suggested that the incident was an excuse for investors to sell stocks in what is increasingly viewed as an overvalued market. South Korea had played down the suggestion of North Korea’s involvement, but investors are going to remain cautious until they know what happened for sure (on Friday).

Earlier on Friday, the U.S. Commerce Department said Gross Domestic Product expanded at an annual rate of 5.6% in the 4th quarter, instead of 5.9%, as it previously estimated and as analysts had been expecting. Separately, the Thomson Reuters/University of Michigan’s Surveys of Consumers consumer sentiment index came in at a final March reading of 73.6, above expectations, but unchanged from February.

The big news on Friday was the fact that the Euro zone leaders received approval from financial markets for a “band aid” agreement to create a safety net for debt-ridden Greece. Central bankers played down the likelihood that Athens, which is struggling to cut a giant budget deficit, would ever need hard cash from European governments and the International Monetary Fund (IMF) to avoid defaulting on its debt.

But the day after the leaders hammered out their deal in Brussels, the plan remained short on details and the IMF made no direct comment on its role, which Berlin had demanded due to public hostility in Germany to bailing out Athens.

Greece, which must borrow some 16 billion Euros between April 20 and May 23 alone to refinance maturing debt, declared markets were no longer fearful that Athens would fail to make its debt repayments, and the Euro rose against the U.S. dollar.

This morning stocks rose around the world and commodities rallied as the U.S. dollar fell against the Euro after Greek deficit concern abated and the economic recovery sparked demand for more risk taking. The MSCI World Index of 23 developed nations’ stocks gained for a 3rd day, advancing 0.3%. Futures on the Standard & Poor’s 500 index rose 0.6%. Crude oil increased 0.9% to exceed $80 a barrel.

The European Union reported an improvement in business and consumer confidence, days after the region’s leaders and the IMF pledged to help Greece finance its budget deficit. A U.S. jobs report on April 2nd may show the largest increase in employment in 3 years.

In short, the global economic recovery appears to be taking hold.

Regards,

Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA

SVP & Partner