The AEC Lens Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More » Anxiety Spells afflict Stock Markets in AprilMay 12th, 2022 by Alex Carrick, Chief Economist at ConstructConnect
Article source: ConstructConnect April was not a good period for stock markets. In North America, on a month-to-month basis, the DJI was -4.9%; the TSE -5.2%; the S&P 500, -8.8%; and NASDAQ, -13.3%. On a year-over-year basis, only the Toronto Stock Exchange (TSE), which has a heavy weighting of resource sector firms, managed a gain, +8.7%. (Commodity prices have been on an upswing.) The S&P 500 was -1.2% y/y; the DJI, -2.7%; and NASDAQ, -11.7%. Versus its 52-week high, NASDAQ was a stunning loser, at -23.9%. A drop of -20.0% or worse is known as ‘bear’ territory. The Russell 2000 index, for small cap firms, was also bearish in April, at -24.2% compared with its peak. Several of the biggest high-tech firms have been missing profit targets (Meta), or suffering unexpected and uncharacteristic losses (Amazon), or seeing reductions in their number of subscribers (Netflix). Runaway inflation and its unwelcome companion, interest rate hikes, have also been suppressing the investment sentiment of day traders, hedge funds and brokerage houses. The net effect has been a pummeling of valuations unprecedented in a decade plus. Other factors have also been playing into weaker stock prices.
Among major stock market indices globally, Hong Kong’s Hang Seng index has experienced the biggest drop year over year, -26.6%. Two other indices with notably sharp declines y/y have been ‘iShares Emerging Markets, Asia’, -21.7%, and iShares (all) Emerging Markets, -20.0%. On a cheerier note, at +8.2%, London’s FTSE in April achieved a y/y gain that was nearly equal to the TSE’s +8.7%. Also, the FTSE was the only index among the 14 showcased in Graph 6 to squeak out an advance month to month in April, +0.4%. Stock markets, when they’re roaring, tend to boost what has been termed the economy’s ‘animal spirits’. An increasing wealth effect makes everyone holding assets in online or brokerage accounts, 401(k)s, mutual and pension funds feel upbeat. When the opposite occurs, gloom has an opportunity to sneak in and cast shade on the prevailing mood. Graph 3
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