CIBC Private Wealth
October 02, 2024
Money Economy Professionals Commentary NewsMorning Market Brief
Canada’s main index, the S&P/TSX Composite Index (TSX), posted a solid gain over the third quarter of 2024. Canadian equities benefited from two rate cuts from the Bank of Canada (BoC) over the quarter, adding to the one in June. While gains in Canadian equities might not be as big in the quarters to come, the third-quarter increase highlights the confidence domestic and foreign investors have in Canadian companies and the economy.
- The TSX rose almost 10% over the third quarter of 2024. This marked the biggest quarterly return for Canadian equities since the second quarter of 2020, when stocks surged higher following their dramatic fall as economic activity came to a halt in response to the COVID-19 pandemic.
- Real estate, health care and financials were the top-performing sectors on the TSX over the quarter. These sectors are all sensitive to interest-rate changes, particularly real estate. Lower interest rates are expected to help the real estate sector.
- Global equities also advanced over the quarter, but not at the same pace as Canadian equities. US equities, as measured by the S&P 500 Index, posted a return of just over 5%. Canadian bond prices also gained over the quarter, with bond yields moving lower.
- The BoC’s interest-rate cuts also appear to be improving Canadian consumer confidence. The Bloomberg Nanos Canadian Confidence Index increased over the week ended September 27, the second straight increase.
Canadian equities might continue to benefit from more interest-rate cuts in the months ahead. Still, there could also be bouts of volatility, with economic conditions relatively uncertain and several external factors at play, including ongoing geopolitical tensions. The BoC is expected to cut interest rates again this year.
If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.