Market Quote: S&P 500 Hovers Near Highs, Middle East Tensions Grow, Canadian Dividend Yields Take the Lead
Author: The editor's desk
January 4, 2024
Members of AGF’s Investment Management Team weigh in on the week that was in global financial markets.
Softness earlier this week in equity markets may be partly attributed to the fact that some investors are selling their 2023 winners now, so they don’t pay capital gains tax until 2025, but it’s also possible that it’s because the market is overbought following the solid rally in stocks over the past few months.
The S&P 500 Index is still well within striking distance of topping its all-time closing high of 4796.56 and, technically speaking, could climb even higher near term if it can break through the 4800 level and stay there. Yet because the S&P 500 closed below a key support level of 4700 on Thursday, more weakness may be ahead in the short run.
The attack this week that killed about 100 Iranians at a memorial service in the city of Kerman for Iran’s former top general, Qassim Suleimani, comes just days after the assassination in Beirut of Saleh Arouri, an exiled Hamas official who acted as a liaison with Iran and Hezbollah. More targeted hits are likely, raising the threat of a widening war and oil price instability.
After lagging for most of 2023, the S&P/TSX Composite Index now has a trailing dividend yield that is slightly higher than the yield on a Canadian 10-year government bond. While the “advantage” is still less than a percentage point, it may tick even higher if bond yields continue to fall in anticipation of interest rate cuts this year. This could act as a catalyst for income-generating stocks, which, on par, were shunned this past year in comparison to the equity market overall.
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