Encouraging signs

Equity markets were generally stronger over the second quarter, with U.S. technology companies leading the charge. Stocks elsewhere delivered generally positive returns, albeit up by a more modest amount.

Canadian equity market

Canada’s major stock indexes posted a gain in the second quarter despite a surprise quarter-point interest-rate increase by the Bank of Canada (BoC) on June 7. Investors remained encouraged by the backdrop of positive economic growth and the apparent likelihood that the BOC would ultimately shift to a neutral policy by year end. Although Canadian stocks moved higher, the country trailed its global peers. Canada was hurt by its large weightings in energy stocks, which underperformed as oil prices came under pressure from concerns about the demand outlook, and industrials, which were dampened by the prospect of slower economic growth; financials also lagged somewhat due in part to the inverted yield curve. Not least, the country’s low allocation to technology stocks pressured relative results given the sector’s outsize gains.

U.S. equity market

U.S. stocks posted a sizable advance in the second quarter. The market made little headway in April and May, as macroeconomic and interest-rate uncertainty offset the positive impact of better-than-expected corporate earnings and generally encouraging inflation and employment data. In June, however, signs of the economy’s resilience and the U.S. Federal Reserve’s decision to pause its interest-rate hikes lifted stocks even as the central bank signaled that more rate hikes were likely in 2023. Against this backdrop, growth stocks soundly outpaced value stocks, with the information technology sector leading the way amid investor enthusiasm for artificial intelligence. The consumer discretionary and communication services sectors also posted notable gains; conversely, the more defensive utilities and consumer staples sectors and energy stocks were weak performers. 

International equity market

The world equity markets gained ground in the second quarter, reflecting mounting optimism that the global economy was on track for a soft landing despite central banks’ long series of interest-rate increases. However, returns for Canada-based investors were dampened by the weakness in foreign currencies relative to the Canadian dollar. U.S. mega cap technology stocks led the way higher behind mounting enthusiasm about the prospects for artificial intelligence. Japan also performed very well in local currency terms thanks to strong inflows from foreign investors. Traditional value sectors—such as energy and financials—lagged, contributing to underperformance for resource-heavy nations such as Canada. The emerging markets also remained weak in relative terms, with China dragging the category lower due to a softer-than-expected post-COVID reopening.

Fixed income market

Global bonds produced mixed results in the second quarter but declined overall in U.S. dollar terms. North American bond yields rose, putting downward pressure on bond prices, amid short-term interest-rate increases by the U.S. Federal Reserve (Fed) and BoC, along with U.S. government wrangling over the federal debt ceiling. Bond yields were relatively unchanged in the eurozone as the European Central Bank slowed the pace of its interest-rate increases, while yields surged in the United Kingdom as the Bank of England continued to wrestle with stubbornly high inflation. Bond markets in the Asia-Pacific region fared best during the quarter as economic weakness in China led to an interest-rate cut by the People’s Bank of China and concerns about the impact of a struggling Chinese economy on economic growth in the region. As with regional performance, sector returns also varied in the second quarter. Sovereign government bonds generally declined, reflecting the overall rise in global bond yields during the quarter; in contrast, high-yield and investment-grade corporate bonds posted positive returns, benefiting from improving economic data in many regions of the world.

Market index¹

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S&P/TSX Total Return (CAD$)






S&P 500 Composite Total Return (CAD$)












MSCI Emerging Markets Free (CAD$)






FTSE TMX Canada Bond Universe Total Return (CAD$)






1 Source: Bonds, FTSE Russell; equities, TD Securities, as of June 30, 2023. It is not possible to invest directly in an index. Past performance does not guarantee future results.

The material contains information regarding the investment approach described herein and is not a complete description of the investment objectives, risks, policies, guidelines or portfolio management and research that supports this investment approach. This commentary in this report is provided for informational purposes only and is not an endorsement of any security or sector. The opinions expressed are those of Manulife Private Wealth as of the date of writing and are subject to change without notice. The information in this document including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. This material does not constitute an offer or an invitation by or on behalf of Manulife Private Wealth to any person to buy or sell any security. Past performance is no indication of future results. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable, but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein. Neither Manulife Private Wealth or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein. Please note that this material must not be wholly or partially reproduced. 

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Manulife Private Wealth

Manulife Private Wealth

Manulife Private Wealth

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