Canadian equity markets have been difficult to sort out lately. They’re twitchy, and lack consistent trends. Let’s take a closer look at the evolution of sector valuations and performance in an attempt to reveal the new market leadership.
This chart plots two things; the six-month total return for each S&P/TSX industry subsector and the change in the forward price-to-earnings ratio. I’m using forward P/E with the full understanding that analyst forecasts are frequently wrong. But, I think that using trailing earnings is even more problematic – the global macro environment has changed too much for trailing earnings to be more relevant than estimates.