Canadian Equities Outperform

The performance differential between the Canada and U.S. equity markets in 2022 might be called a ‘Tale of Two Sectors,’ says an analysis by Morningstar Indexes. Its domestic index has declined 9.4 per cent year-to-date as of June 16 as compared to a 21.7 per cent decline for its total market exposure index for the same time period. This reverses a notably different long-term trend which saw the Canada index underperform its U.S. counterpart by approximately 700 basis points on an average annual basis over the past 10 years. Dan Lefkovitz, a strategist at Morningstar Indexes, says, “As a resources-heavy market, Canada is benefitting from surging prices for oil and other commodities. In the U.S., the tech sector, which was overvalued coming into the year, has been leading the market down, but the tech wreck in Canada has been mostly limited to Spotify.”