Market Commentary – Q3 2024

• Canada: +17.44% 

• United States: +21.69% 

• Europe: +11.57% 

• Emerging Markets: +18.73% 

• World: +19.16% 

This quarter highlighted the continued resilience of the global markets with inflation continuing to cool and expectations of further interest rate cuts. 

The US market continues to lead, driven by strong corporate earnings and optimism around potential further interest rate cuts. The US Federal Reserve initiated its first rate cut, reducing interest rates by 50 basis points in September. With inflation falling and signs of the labor market softening, Fed officials have signaled their intention to move interest rates down to less restrictive levels to prevent a weakening in the economy. 

The Bank of Canada has decreased interest rates by 125 basis points this year. The inflation rate in Canada continues to cool and slowed more than expected. The Consumer Price Index (CPI) rose 1.6% on a year-over-year basis in September. This is below the central bank’s target of 2%. Lower interest rates will be welcome news for those on a variable rate mortgage and those with upcoming mortgage renewals. 

International markets rallied from the additional stimulus from China’s policymakers to help support the country’s sluggish economy and property market. Policymakers lowered interest rates and mortgage costs, freed up capital for banks to increase lending and provided greater fiscal support for their stock market. The latest measures show determination of the government to revive the world’s second-largest economy, triggering a sharp rally in Chinese stock prices. 

It’s worth highlighting the dramatic shift in the commodity performance between the price of oil and gold in the 3rd quarter of 2024.  

• Gold increased by 13% and surged to a new high of $2,685 USD per ounce, supported by investor demand for safe-haven assets amid rising geopolitical risks and expectations of further interest rate cuts. 

• The price of a barrel of crude oil fell by 16% amid growing concerns around the weakening demand from China and Europe. 

Upcoming US Election 

2024 is one of the biggest election years in history with at least 76 countries representing 60% of the global population voting for a potential change in government around the world. 

Attention will be especially focused on the US where the election in November is expected to be close. The anticipation of the upcoming US election often brings up questions about how the financial markets will respond. Looking back at history, whichever party wins the election does not provide an indication of the future performance of the stock market. 

• On average, market returns have been positive in election years and the sequent year 

• The US stock market has performed well regardless of whether Republicans or Democrats win the presidency 

• Nearly 100 years of stock market history suggests that making investment decisions based on which party controls the House or Senate is unlikely to predict future performance 

• Returns during election months tended to not look much different from any other month going back to 1926 

 What does this mean for you? 

• Your investment portfolio was designed with future stock market volatility in mind. The assets are invested in a well-diversified portfolio.  

• For those generating an income, we typically have two to three years’ worth of income in GICs and high-yield savings account to generate your income. This income strategy was designed to avoid selling any investments at a loss while still generating your desired income. With the strong stock market performance in 2024, we will be replenishing high yield savings & GICs for income using the growth in the portfolio. 

• For accounts that are accumulating and not taking an income, we are maintaining an overweight equity allocation.