Market update Q4 2024

Q4 2024: Rising markets, lower rates, and resilient consumers

The year 2024 was a remarkable period for equity investors, with exciting technological advancements, welcomed interest rate cuts, and resilient consumer spending. As we look back, several key trends and events stand out that shaped the global investment environment.

Canada struggles while the U.S. powers ahead

In Canada, manufacturing and services remained sluggish, and small business insolvencies jumped 41.7% over the 12 months ending in October.* This signals persistent financial pressures that could further weigh on the economy.

In contrast, the U.S. economy experienced steady growth. Consumer spending and new technologies bolstered productivity and economic activity south of the border.

Gains for both stocks and bonds

Global stock markets had another strong year in 2024, building on the recovery and growth seen in 2023. The S&P 500 Index, S&P/TSX Composite Index, and MSCI World Index returned 23.3%, 18.0%, and 17.0%, respectively, supported by resilient corporate earnings and consumer demand.**

Bond markets also gained as interest rates fell and bond prices rose. Canadian and U.S. bonds, as measured by the FTSE Canada Universe Bond Index and Bloomberg US Aggregate Bond Index, returned 4.2% and 1.3%, respectively, in 2024.‡

Looking to 2025

• Slower global growth. The global economic slowdown is likely to continue in 2025. The U.S. may be an exception with low unemployment and strong business growth expected under the Trump administration. Canada’s rate-sensitive economy remains more vulnerable despite lower borrowing costs.

• More rate cuts. Central banks eased rates in 2024 to stimulate growth and may continue to do so in 2025. Canada, grappling with domestic challenges, could adopt a more aggressive approach than the U.S.

• Trade talks. Expect Canada-U.S. tariff negotiations to grab headlines again and create some noise; however, major changes are unlikely given both economies’ reliance on each other.

Staying focused on what matters

Uncertainty is always a factor in investing, but history shows that focusing on well-run companies and sticking to a plan can deliver favourable results over the long term.

*Source: https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-canada-october-2024-highlights. Retrieved on January 6, 2025.

**Source: Bloomberg. As at December 31, 2024.

‡Source: Bloomberg. As at December 31, 2024.

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