Canadian equities face serious headwinds: Nasdaq

Prab Sagoo, associate director at Nasdaq, offers analysis on key trends impacting the Canadian market.

• Last Friday was a tough session for the broader markets, though this wasn’t limited to Canadian stocks. The Greek situation continues to weigh heavily on the markets, with the ensuing uncertainty loathed by the investment community. Until we have a resolution on this, we will likely continue to see the TSX under pressure.
• Canadian equities continue to face other serious headwinds at the moment, mostly in the form of sustained weakness in oil prices, elevated consumer debt levels and a worrisome housing market.
• In addition to this, a rate increase from the Federal Reserve (well ahead of any planned/projected increases from the Bank of Canada) will likely drag some Canadian treasuries higher and put additional pressure on income sectors; this would include banks as well as regular utilities and REITs.
• Energy and financials, both of which are heavily weighted in the TSX, are down by +5% and +2% respectively on a YTD basis. Until we have a meaningful rally here, the TSX will find it difficult to advance too much further.

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