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How have investment factors performed during the coronavirus stock market turmoil? – Benefits Canada

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During 2020’s second quarter rebound, U.S. equities saw stronger performance than other developed markets like the U.K. and the rest of Europe.

However, during the coronavirus pandemic so far, factors have moved largely in tandem in those geographies, according to Philip Lawlor, managing director and head of global investment research at FTSE Russell, during a webinar hosted by the firm last week. “We actually had a much more consistent profile across regions with a fairly uniform rotation out of the low-volatility factor and the yield factors into size or smaller-cap stocks.” 

The trend toward size came through strongly during the first few weeks of the second quarter but fizzled out into June, he said.

Read: Back to basics on factor investing

Over the first half of the year, factors performed similarly across regions with a positive skew towards quality and momentum, while size, value and yield underperformed in most regions. In particular, momentum has been on a wild ride, said Lawlor, noting it performed well during the initial stages of the market meltdown, slipped in May as restrictions began to ease worldwide and is now climbing again as optimism deteriorates. “We’ve seen a very similar profile in terms of this roller-coaster ride for the performance of quality and profitability factors in year-to-date data.”

Part of momentum’s outperformance lies in its sector exposure, he added. “We can see in the case of the U.S., momentum factor benefited from being long technology and health care, which we can see are two sectors that have delivered positive performance contributions, most notably technology. And also the factor benefited from being short the financial, oil and industrials sectors which underperformed.”

Looking at the last 12 months, quality and value have been on a long-term divergence trend, with quality outperforming across the U.S., the U.K. and Europe. The effects of the pandemic have served to strengthen this trend, with the notable exception of quality’s outperformance somewhat muted in the U.K. during 2020 so far, said Marlies van Boven, head of global investment research for Europe, the Middle East and Africa at FTSE Russell, also speaking in the webinar.

Read: Institutional investors turn to AI, data science to yield alpha

Quality tends to be overweight technology, which has been driving the gap between quality and volatility throughout the pandemic, she said. But for the U.K., the quality factor’s performance was stifled by heavier exposure to oil and gas and basic materials than appears in quality in the U.S. market or the rest of Europe.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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