December 2024 - Enthusiasm abates toward year-end

3 mins

Stock markets and the economy

Publié le 07/01/2025 Mis à jour le 07/01/2025

The last month of the year was rather disappointing on the global equity markets, serving as a reminder that economic and political uncertainties were still very much in evidence. Canada came under increasing pressure, while the United States continued to perform impressively, even though political and monetary turmoil added a dose of volatility. Emerging markets stood out, ending the year on a positive note.

AS AT DECEMBER 31, 2024

	Closing 31-12-24	Variation 30-11-24	Variation 31-12-23
Key interest rate in Canada (%)
Key interest rate in Canada (%)	3.25	-0.50 ▼	-1.75 ▼
Oil (WTI)
Oil (WTI)	$71.87	5.7% ▲	0.3% ▲
Gold
Gold	$2,624.50	-0.7% ▼	27.2% ▲
EUR/CAD
EUR/CAD	1.49	0.9% ▲	2.0% ▲
JPY/CAD
JPY/CAD	0.01	-1.8% ▼	-1.9% ▼
USD/CAD
USD/CAD	1.44	2.7 % ▲	8.4 % ▲

Sources: Bank of Canada, Bloomberg Finance L.P.

CANADIAN MARKET

-3.3% (S&P/TSX Composite 31-12-2024)

December was particularly difficult for the Canadian market. The S&P/TSX Index returned -3.3% on weakness in the energy and materials sectors. The underperformance was due to a combination of economic challenges and a climate of uncertainty, which was conducive to caution. Despite successive rate cuts by the Bank of Canada to support the economy, signs of weakness mounted. For example, unemployment reached a three-year high of 6.8%. In addition, the resignation of Finance Minister Chrystia Freeland amplified political concerns, helping push the Canadian dollar to its lowest level against the U.S. dollar since March 2020.

The Canadian bond market also declined, with the FTSE Canada Universe Bond Index returning -0.7% on expectations of more moderate rate cuts from the Bank of Canada in 2025.

U.S. MARKET

0.3% (S&P 500 31-12-2024 in CAD)

The S&P 500 Index fell 2.4% in U.S. dollars in December, with most sectors ending the month in the red. The Federal Reserve’s statements about a slower pace of rate cuts in 2025 dampened investor enthusiasm. The Fed cited persistent inflationary risks and uncertainty surrounding the incoming administration’s pro-growth economic policies. Political tensions, particularly around the debt ceiling, also helped keep market volatility high.

For Canadian investors, however, the index returned 0.3% because the loonie’s weakness against the greenback increased the return.

INTERNATIONAL MARKETS

0.4% (MSCI EAFE 31-12-2024 in CAD)

The MSCI EAFE Index rose 0.4% on modest gains in some sectors in Europe and Japan, such as consumer discretionary and information technology. That being said, the return hides contrasting realities. Germany, the traditional engine of growth for the euro zone, continued to struggle amid a persistent economic contraction and rising political tensions.

In Japan, manufacturing activity rebounded slightly, but concerns about global demand continued to prevent a more sustained recovery.

EMERGING MARKETS

2.6% (MSCI Emerging Markets 31-12-2024 in CAD)

Emerging markets were the big winners at year-end, returning 2.6% in Canadian dollars and 1.2% in local currencies. China and Taiwan contributed the most to the return, while South Korea and Brazil detracted the most. In China, for example, the government stepped up its efforts to support the slowing economy.

Even so, risks related to U.S. trade policy, including potential tariff hikes, remained a concern for emerging markets.

Read other articles

About the stock markets and the economy.

Read other articles

Sources: Bank of Canada, FTSE International Limited, S&P Dow Jones Indices LLC and MSCI Inc.

This review has been prepared for the general information of our clients and does not constitute an offer or solicitation to buy or sell any securities, products or services and should not be construed as specific investment advice. All opinions and estimates expressed in this document are as of the time of its publication and are subject to change. The information contained in this document has been obtained from sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. The content of this presentation is proprietary and should not be further distributed without prior consent of Gestion FÉRIQUE.

The S&P/TSX Composite Index and S&P 500 Index (“Index(es)”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Gestion FÉRIQUE. © 2024 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein.

FTSE Global Debt Capital Markets Inc (FTSE GDCM), FTSE International Limited (FTSE) and the London Stock Exchange Group companies (the Exchange, together with FTSE GDCM, FTSE and the Exchange, the “Licensor Parties”). The Licensor Parties make no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Canada Universe Bond Index (the Index) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE GDCM and all copyright in the Index values and constituent lists vests in FTSE GDCM. The Licensor Parties shall not be liable (whether in negligence or otherwise) to any error in the Index and the Licensor Parties shall not be under any obligation to advise any person of any error therein. FTSE® is a trademark of the FTSE International Limited and is used by FTSE GDCM under licence.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.