Global equity markets finished largely flat during the week ended April 1. Investor sentiment was mixed amid positive and negative reports on the negotiations between Russia and Ukraine. Meanwhile, expectations for rising interest rates were heightened after data showed further improvements in the U.S. labour market, while inflation in Europe climbed to a new all-time high. In Canada, the S&P/TSX Composite Index finished lower, dragged down by the Health Care sector. The S&P 500 Index in the U.S. posted a small gain over the week, led by the Real Estate sector. Yields on 10-year government bonds in both Canada and the U.S. declined over the week. Oil and gold prices both finished in negative territory.
Canadian small business outlook improves
According to the latest Canadian Federation of Independent Business (CFIB) Business Barometer, small business optimism improved in March 2022.
Its short-term index, which is based on participants’ three-month outlook, rose by 6 points to 60.2. This is the highest level its short-term index has reached since before the outbreak of COVID-19.
Its long-term index, which is based on a 12-month outlook, rose by 2 points to 65.1.
The highest increases were in central Canada, followed by eastern and then western Canada.
U.S. job creation slows in March
U.S. job creation slowed in March 2022, according to the U.S. Bureau of Labor Statistics.
At 431,000, the number was below the market’s expectations of 490,000 and less than the 750,000 (revised) created in February.
Nevertheless, lower rates of COVID-19 infections and easing public health restrictions helped lower the unemployment rate to 3.6%, the lowest level since February 2020.
March’s labour force participation rate rose to 62.4%, the highest in a year.
Oil futures fall
During the week, multiple factors weighed on West Texas Intermediate crude oil futures, which fell by over 10% to end at around US$100 per barrel on Friday.
U.S. President Joe Biden announced the release of 1 million barrels of oil per day from the U.S. Strategic Petroleum Reserve. The daily releases are to continue for six months, starting May 1. It is the largest release ever from the reserve.
OPEC+ has also agreed to increase the oil supply by 432,000 per day, beginning in May. However, western countries are pressuring Saudi Arabia and the UAE to increase their output further.
New lockdowns in China following rising COVID-19 infection numbers also created concerns about the impact on future demand for oil. China is the world’s largest importer of crude oil.
Record high for U.S. corporate profits
U.S. corporate profits reached a record high in the fourth quarter of 2021, according to the U.S. Bureau of Economic Analysis.
Corporate profits rose by 0.2% to a US$2.52 trillion, following a 3.4% increase in the third quarter 2021.
Net cash flow and inventory rose by 3.0% to US$3.23 trillion, while net dividends rose by 1.8% to US$1.47 trillion. Undistributed profits fell by 2.0% to US$1.06 trillion.
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