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Last Update: June 23, 2023

Interest Rates Forecast Stalls Markets Rise 


Their battle with inflation far from over, central banks across the world are signalling more interest rate increases and thwarting bets that hiking cycles were set to wind down. That’s prompted investors to rethink the ongoing surge in stocks led by a handful of tech companies.


The second-quarter stock rally hit a wall this past week as investor enthusiasm waned amid the central banks moves coupled with concerns over the narrow breadth of market advances – driven almost exclusively by the seven largest tech companies in the U.S. – and stretched valuations as share prices reach the high end of current ranges.


Strong economic momentum since the Bank of Canada declared a pause in January prompted policymakers to resume interest rate hikes earlier this month, increasing the benchmark overnight rate to 4.75%. The move upended markets, and traders are ramping up bets on another hike at the Bank’s next meeting on July 12. The Bank of Canada's governing council considered waiting until July to raise rates, but ultimately decided to act sooner in the face of hot economic data the minutes from the Bank’s meeting show.


Globally, central bankers’ mounting concern that inflation remains undefeated is locking them into a new phase of efforts to cool overheating economies that have so far been able to withstand a year’s worth of interest rate increases.


Canada’s main stock market, the S&P/TSX, finished down for the week, touching a three-week low, with interest rate-sensitive stocks leading the declines.


As markets react and adjust to changing conditions, a continued focus on your long-term goals remains the best course of action. Investing through a well-diversified portfolio has historically provided the best experience through a combination of goals-based returns and reduced volatility over time.

• Short-Term View: Stock markets suffered a down week as enthusiasm waned in the face of further interest rate increases by global central banks.

 

• Longer-Term Thinking: Sticking to your long-term plan through periods of volatility is central to investment success.


• Logic Over Emotion: Perspective is key. Focus on long-term goals and timeframes. Contact your advisor to discuss any questions and concerns you may have.

Our Experts Say…

“While a “narrowing” in the U.S. stock market has not always been a signal that a rally in equities is about to come to an end, we still think that it could foreshadow a poor outlook for U.S. equities over the rest of this year.”


Corrado Tiralongo, Chief Investment Officer

IPC Portfolio Services

Over the past 10 years, markets are positive. Perspective is key. Markets do react to short-term increases in volatility – see the grey lines below – but the long-term trend is upward in the blue and red lines.

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Source: Morningstar Direct. Growth of $100,000 shown.Rolling 10-year total returns from June 23, 2013 to June 22, 2023 in local currency. Volatility is illustrated by the rolling 5-day minimum and maximum percentage change for each of the indices shown.     

A look at our Portfolio Families


Investors that simply want a lower-cost investment that gives them exposure to key markets around the world should look at the IPC Essentials Portfolios. We’ve combined several ETFs into a cost-efficient package to ensure broad market participation.


For investors looking for a concentrated set of active managers, the IPC Focus Portfolios combine three of our top equity managers with our leading Canadian fixed income manager to give you unfettered access to their security selection expertise.


If your investment savings will be the sole source of income in retirement, or you want enhanced downside protection, look to the Counsel Retirement Portfolios for their strategies aiming to lower risk in periods of extended market drawdowns. These strategies seek to reduce sequence of returns risk in the timeframe leading up to and entering retirement.


The Counsel Strategic Portfolios provide effectively diversified global exposure in a comprehensive approach that combine value, growth and factor investing strategies into all-in-one solutions geared to investor risk profiles.


If you're looking for access to concentrated, high-conviction strategies and a transparent, understandable investment approach, the IPC Private Wealth Visio Pools are a sophisticated, yet simplified portfolio solution that combine a concentrated selection of equity and fixed income securities with globally diversified ETFs.


IPC Private Wealth Fundamentals provide access to directly held stocks and diversification through global equity and fixed income ETFs, giving investors access to a lower-cost discretionary managed account solution.


Higher net worth investors should consider IPC Private Wealth, a personalized discretionary management solution which includes access to directly-held securities, personalized tax management, sophisticated strategies including alternative investments, enhanced capital preservation, and the ability to combine family assets for a comprehensive investment approach.

DID YOU KNOW?

At IPC Portfolio Services, we continue to monitor markets and will keep you up to date.

We are long-term investors. While responding to short-term conditions is part of our process, we are focused on managing to the long-term objectives of our portfolios.

Our Experts Say…

“There’s (still) a lot of uncertainty around the world, but as we scan the world, we do find that there are many opportunities and that there are certain places where there are more opportunities than others.”


Ken Applegate, Portfolio Manager, Wasatch Global Investors

Global Small Cap Investment Specialist

Counsel
Private Wealth

When markets are volatile, we know it can be challenging to keep your emotions at bay. We’re here to be your guide and help you stay focused on your goals. If you have any concerns, please give us a call.

Sources: MorningstarDirect, bnnbloomberg.ca, Reuters, cnbc.com Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The content of this document (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. This document includes forward-looking information that is based on forecasts of future events as of the publication date. Counsel Portfolio Services will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. This information is not investment advice and should be used only in conjunction with a discussion with your IPC Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. Counsel Portfolio Services is a wholly-owned subsidiary of Investment Planning Counsel Inc. IPC Private Wealth is a division of IPC Securities Corporation. IPC Securities Corporation is a member of the Canadian Investor Protection Fund. Mutual Funds available through IPC Investment Corporation and IPC Securities Corporation. Securities available through IPC Securities Corporation, a member of the Canadian Investor Protection Fund.

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