The first quarter has come to end and what a quarter it's been, especially for the U.S. markets.

The Dow Jones Industrial Average (large U.S. index) had its best first quarter since 1998 and the S&P (largest U.S. index) had growth of over 11 per cent. The TSX (the Canadian stock market) grew by about four per cent – a nice start to the year in Canada and a tremendous start in the United States.

The reason behind most differences between Canadian markets and the U.S. markets, in my opinion, has been because of the performances of commodities and energy sectors.

These sectors after the halfway point of the first quarter started to disappoint with worse than expected economic statistics coming out of China.

Even though the United States faired a lot better as of late, and we export over 90 per cent of our goods to them, China still plays a huge part in the pricing of commodities and energy which make up about half our stock market in Canada.

Thus, if it is perceived that China is growing at a slower pace, it will affect our stock market. The largest markets in the United States are not as reliant on commodities and energy for growth. Their indices are a lot more diverse with more sectors making up larger components of the index. Therefore a fall in commodities and energy would affect the U.S. markets but not as much as in Canada.

Looking ahead, there will be a number of important pieces of economic data coming out in Canada and the U.S., which I believe will set the tone for the North American stock markets for the second quarter of 2012.

Employment numbers are being released next week, the first quarter earnings season begins shortly in the U.S. and GDP numbers will be released in the not so distant future for quarter number one. Many analysts believe for example, that the first quarter earnings may disappoint. Expectations have risen very high in the past few quarters and this has caused a lot of investors to question whether U.S. corporate earnings can maintain their momentum.

In my opinion, first quarter earnings reports for both corporate Canada and the United States will be extremely crucial. I feel that they will be even more important than the last few quarters as we are now dealing with declines in growth for both Europe and China.

If the United States can continue to show the rest of the world that their companies are continuing to grow and flourish, even when some of the other major players of the world are not, this should provide the confidence investors need to power the North American markets even higher in the coming months.

About The Author:  Allan Small - Senior Investment Advisor at Dundee Wealth.
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