April GDP may show increase

This week’s domestic economic calendar is back-end heavy: on Thursday, we’ll get GDP, industrial/raw materials pricing and payroll releases.

GDP for April may show a small increase, though the second quarter is expected to be weak overall, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly market commentary. That weakness is largely due to the Fort McMurray fire taking its toll.

Read: Canada’s oil business needs Fort McMurray to rebuild

In March, real GDP decreased 0.2%, after also dipping in February. Statistics Canada says, “The decline in March came primarily from mining, quarrying, and oil and gas extraction and retail trade.”

More highlights

• Brexit shockwaves continue to filter through into the markets, though the TSX was spared on Friday, declining just 1.7%. While the S&P500 and Dow both saw losses in excess of 3%. Interestingly, the TSX SmallCap Index ended higher by 0.2%, outperforming the large cap TSX60, which fell by almost 2% on Friday.
• Also, despite an uptick in volume on Friday, volumes across the TSX were relatively normal for the week. Through into Friday’s close, the energy sector was the second-best performer (materials took the top spot).
• Still, heading into the holiday shortened Canadian trading week, all eyes continue to remain on the Brexit fallout. Read: Buy boring stocks post-Brexit
• In the U.S., GDP data is coming Tuesday and Janet Yellen’s speech will occur on Wednesday.
• Mid-June short interest data indicated that the short covering seen in the previous period was fleeting, with short bets against TSX constituents rising by 21% on average. All 10 sectors saw an increase in shorts, with 5 out of 10 sectors seeing the largest increases in shorts seen all year. And, continuing the reversal of late May, the advancing shorts/declining shorts ratio was a very notable 7:2—reflecting increases across the board. Read: How to trade volatility

Staff

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