After one of the most challenging calendar year performances since 2008, U.S. equities posted strong gains in January. The gains came as investor sentiment around the notion that the Fed could pull off a soft-landing scenario as opposed to a much-feared deep recession became more prominent. Corporate earnings are in full swing with investors eagerly awaiting to see how corporates fared against rising cost pressures.

Overseas, the International Monetary Fund inched up its outlook for global growth this year, reflecting greater-than-expected resilience in economies across the world. Canada’s benchmark S&P/TSX Composite Index was 7.1% higher in January, as all the benchmark’s underlying sectors were positive during the month. The gain was led by the information technology and health care sectors, with 19.5% and 14.4% returns, respectively. Small-cap stocks, as measured by the S&P/TSX SmallCap Index, gained 8.8% for the month. The U.S. dollar depreciated by 1.8% versus the loonie during the month, slightly dampening the returns of foreign markets from a Canadian investor’s standpoint. Note that all returns in this paragraph are in CAD terms. U.S.-based stocks, as measured by the S&P 500 Index, rose 4.5% in January. The benchmark’s top-performing sectors for the month were consumer discretionary and communication services, with respective gains of 13.2% and 12.5%. Utilities, health care, and consumer staples were the only sectors in the red during the month, falling 3.5%, 3.5% and 2.6%, respectively. International stocks, as measured by the FTSE Developed ex US Index, advanced 6.5% during the month, while emerging markets rose 5.6%.

The investment grade fixed income indices we follow were up in January. Canadian investment grade bonds, as measured by the FTSE Canada Universe Bond Index, increased by 3.1% during the month, while the key global investment grade bond benchmark rose 3.3%. Global high-yield issues added 4.0%.

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