US Markets

U.S. stocks suffered significant losses on Friday, causing the S&P 500 to finish at its lowest point in 2022.

• The Dow Jones lost nearly 826 points during the session before recovering to fall by 486 points, which is 19.9% below its all-time high.
• For the week, the Dow fell 4%, the S&P dropped 4.65%, and the Nasdaq lost 5.07%.
• The current 10 Year U.S. Treasury yield is set at 3.68760%

Canadian Markets

The Royal Bank of Canada is concerned that the Canadian economy will be negatively impacted by severe power shortages starting in 2026.

• RBC estimates that demand for electricity will increase by 50% in the next 10 years, but the country will be unable to cater to that demand due to government policies requiring a net zero grid by 2035.
• The fundamental problem RBC finds is that existing natural gas plants will need to keep operating until at least 2035 for the country to have any chance to meet demand. While Canada can benefit from adding solar and wind sites to supplement and increase capacity, it can’t afford to stop burning fossil fuels.
• In the short term, the RBC recommends boosting solar and wind energy generation to “plug the gaps.”
• In the long term, RBC believes that Canada will need to rely more on hydro and nuclear energy to increase power generation in the world’s second-largest country.

European Markets

European stocks were down on Friday as investors reacted negatively to the U.K.’s new economic plan.

• The U.K. announced a series of tax cuts and policy measures to boost economic growth and lower living costs.
• The Stoxx 600 was down 2.3% as all sectors were negative on the day.
• Oil and gas stocks led losses, falling by over 5%.

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Asian Markets

Stocks in Asia were down on Friday as investors continue to have a negative reaction to interest rate hikes in the U.S. and Europe.

• Markets in Japan were closed on Friday for a national holiday.
• All major indexes in China, including the Shanghai Composite, Shenzhen Component, and Hang Seng, were down at the end of last week.
• Stocks in Malaysia, Singapore, and Australia were also down.

Commodities

Oil suffered significant losses on Friday and over the weekend as investors fear a global recession.

• Oil is currently at an eight-month low despite decreased supply from Russia and the war in Ukraine.
• Brent crude was down 4.4%, while U.S. West Texas Intermediate crude lost 5.3%. Both are near their lowest points in 2022.
• Gasoline and diesel in the U.S. both fell by more than 5% last Friday.

Currency Exchange Rates

The U.S. Dollar hit a new 20-year high again on Friday, boosted by the Federal Reserve’s latest interest rate hike.

• The British Pound lost more than 3.7% on Friday after the government announced its economic plan to lower living costs. As a result, the pound hit a 37-year low against the U.S. Dollar.
• The Euro fell after the Purchasing Managers Index for the Eurozone showed that there was a contraction in production in September.
• The Canadian Dollar also fell relative to the U.S. Dollar as the Canadian government remains committed to increasing spending, which will likely create inflationary pressures.

Cryptocurrency

Bitcoin was down slightly on Friday but recovered over the weekend as crypto markets continue to be defined by volatility.

• Bitcoin was down 4% on Friday after gaining 5% on Thursday, then jumped 4% on Saturday despite trading volumes remaining constant throughout this period.
• Bitcoin was down 5% last week and 61% so far in 2022.
• Ethereum lost 12% last week, 20% since the Merge, and 65% so far in 2022.

Good trading,
Chris Svorcik