Source – Bloomberg, RBC Wealth Management, 05/31/16
The potential for higher interest rates in the U.S. was back in focus throughout the month of May. More specifically, recent strong economic data and hawkish comments from Federal Reserve (Fed) Chair Janet Yellen suggest that a U.S. rate hike could come as early as this summer. This marked shift drove U.S. government bond yields back near their April highs. In Canada, the devastating wild res in Alberta, that halted some oil sands operations, were in focus and are expected to have negatively impacted Q2 GDP growth. The fire, along with a major disruption in oil production in Nigeria and a larger-than-expected decline in U.S. crude oil inventories led to a rally in crude oil prices. Brent prices rose above the $50 per barrel mark for the first time this year.
North American equity indices were generally positive this month. The S&P/TSX posted a 1.0% gain. A rally in the Information Technology and Consumer Staples sectors of 8.4% and 4.7%, respectively, was offset by weakness in the Healthcare and Materials sectors, which fell 6.7% and 6.6%, respectively. Overall, 8 of 10 sectors finished the month in positive territory.
In the U.S., the S&P 500 posted a 1.8% gain over the month of May, with 7 of 10 sectors ending the month in positive territory. The Information Technology and Healthcare sectors gained 5.6% and 2.2%, respectively, while the Energy and Industrials sectors fell by 0.6% and 0.5%, respectively.