Last week in the Markets...

North American stock markets lagged most major global indexes last week.

Investors in North America remained focused on developments related to U.S. fiscal issues—the so-called ‘fiscal' cliff that could see tax hikes and spending cuts scheduled for the beginning of 2013 have a negative impact on the economy. Canadian stocks were also held back by commodities price uncertainty and a decline in the price of gold.

Economic data released this week painted a mixed picture of global economic activity. Jobs growth in the U.S. was better than expected in November, sending the unemployment rate to a four-year low of 7.7%. However, U.S. manufacturing was lower than expected in November, pointing to a contraction in factory output. Consumer sentiment fell in early December to its lowest level since August, according to one closely watched barometer.

Job creation in Canada picked up as the November jobless rate fell to 7.2% from 7.4% the previous month. But manufacturing growth slowed for the fifth consecutive month to a two-year low, although it continues to expand.

Eurozone manufacturing contracted but at a slower rate than in October, fuelling hopes that the worst of the slowdown could be over. In China, a widely watched index reinforced recent data showing that the country's manufacturing sector is growing again after more than a year of contraction.

European markets benefitted from optimism over Greece as the country announced plans to repurchase outstanding debt. This would retire up to half of the debt owed to private creditors and reduce the country's debt burden. The European Central Bank (ECB) kept interest rates on hold, and investors were encouraged by the ECB's prediction that a gradual recovery should start late in 2013. Germany's stock market was near a five-year high and European markets generally were at their best level in 18 months.

Asian markets were helped by a pledge by the Chinese government to maintain and strengthen policies aimed at helping the economy.

In other news last week:

• As expected, the Bank of Canada left its key interest rate unchanged.
• Canadian and U.S. auto sales remain strong, with November sales in Canada rising 3.8% y-o-y.

What's ahead this week:

Canada:

• International trade data.
• Manufacturing data.
• Housing starts, house prices.

U.S.:

• Federal Reserve interest rate announcement.
• Consumer price index.
• Retail sales.
• International trade data