Investment update
Weekly insight into the marketplace.
November 4 to November 8, 2024
North American stock markets reached record levels
It was a relatively calm start to the week, with investor sentiment cautious ahead of the U.S. election. Canada’s TSX was flat on Monday, as loses for telecom shares offset gains from the energy sector. The Wall Street benchmark stock indexes closed with losses. On Tuesday, the TSX extended its win streak, with support coming from base-metal stocks. U.S. stock markets also gained, led by the Nasdaq, which closed 1.4% higher. In after-hours trading, with the U.S. election results clear, American equity futures gained 2 to 4%, led by mid-cap stocks. The rally carried through Wednesday, with the Dow leading the U.S. benchmarks higher with a 3.4% gain. Notable individual stock performances included: Goldman Sachs and JPMorgan Chase, which saw their shares spike 13.1% and 11.5%, respectively, on expectations that Trump administration policies will be favourable to the financial sector. Shares of Trump-ally Elon Musk’s Tesla rocketed up 14.8%, while Trump Media stock rose 6%. The positive equity-markets sentiment carried over to Canada, where the TSX closed 1% higher on the day. Thursday saw further gains, with technology stocks leading the way on both sides of the border after the U.S. Federal Reserve (the Fed) announced a quarter-point interest-rate cut. The tech-heavy Nasdaq stood out as the big winner, with its listing of AI chip-maker Nvidia becoming the first to surpass US$3.6 billion in market capitalization. On Friday, the TSX snapped its win streak, giving back 0.35%, as prices for base metals and oil fell. The U.S. stock benchmarks continued to soar, with the financial, energy and tech sectors driving strong performance.
U.S. election results firmed-up investor sentiment
A resounding Republican party victory on Tuesday removed the uncertainty that had hampered financial markets, eliminating fears of drawn-out legal battles over contested results. While control of the House of Representatives was still not decided as of Friday, investors were sure that Donald Trump had been elected president, and that the Republicans would control the Senate. “Assuming, as seems likely, that Republicans complete a clean sweep of Congress, market moves are likely to continue in the coming days and weeks based on expectations for stronger growth driven by tax cuts, larger fiscal deficits and deregulation,” noted Stephen Dover of the Franklin Templeton Institute. “The Trump trade is likely going to run further, in our view, but we urge investors to be discriminating in the investment conclusions they draw from the election results.” (Get the full report: Quick Thoughts - A big night for the Republicans)
The Fed cut its key interest rate
On Thursday, the Fed announced a quarter-point cut, lowering its benchmark rate to 4.6%. The Fed launched its rate- cutting cycle with a larger 50-basis-point reduction in September, after holding its key rate at a four-decade high of 5.3% for more than a year to combat inflation. After peaking at 9.1% in the summer of 2022, inflation is now trending much closer to the Fed’s 2% target. This has led policy-makers to shift their attention to supporting the labour market. The official statement following the decision noted: “the unemployment rate has moved up but remains low,” while inflation “remains somewhat elevated,” although it is returning to target. The transition of power in Washington adds another layer of complexity for the Fed in determining the right path for monetary policy in the months ahead. When asked about the election outcome, Fed Chair Jerome Powell said: “In the near term, the election will have no effects on our policy decisions. It’s such an early stage. We don’t know what the policies are, and once we know what they are, we won’t have a sense of when they’ll be implemented.”
The stock and bond market*
| Index | Close | Week | YTD |
|---|---|---|---|
| S&P/TSX Composite | 24,759.40 | 2.08% | 18.14% |
| Dow Jones Industrial Average | 43,988.99 | 4.61% | 16.71% |
| S&P 500 Index | 5,995.54 | 4.66% | 25.70% |
| NASDAQ Composite | 19,286.78 | 5.74% | 28.48% |
| 10-year Canadian Bond Yield | 3.31% | 0.03% | 0.21% |
| 10-year U.S. Treasury Yield | 4.30% | -0.07% | 0.42% |
| WTI Crude Oil (US$/barrel) | $70.38 | 1.28% | -1.77% |
| Canadian Dollar | US$0.7188 | 0.27% | -4.81% |
| Bank of Canada Prime Rate 5.95% | |||
*Weekly performance ending November 8, 2024. Source: Bloomberg.
U.S. inflation data (November 13): Data for September showed the annual U.S. inflation rate fell 2.4% to its lowest level in more than three years, but “core” prices – which economists watch closely to forecast inflation trends – unexpectedly rose 3.3% from the previous year, up 0.3% from August. Investors will scrutinize the October data, scheduled for release Wednesday, to assess the potential impact on the Fed’s future interest-rate decisions.
Circle these dates
November 28: U.S. markets closed for Thanksgiving Day
December 11: Bank of Canada interest-rate announcement
The commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Life Insurance Company (“Co-operators”) believes these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness. Co-operators is committed to protecting the privacy, confidentiality, accuracy and security of the personal information it collects, uses, retains and discloses in the course of conducting business. Please visit cooperators.ca/privacy for more information. Co-operators® is a registered trademark of Co-operators Group Limited and is used with permission. Investing in your future. Together.TM is a trademark of Co-operators Group Limited. If you are a client who has received this, and you have questions or want to discuss your investments, please contact your Financial Advisor.
The Dow Jones Industrial Average and S&P 500 ("Indices") are products of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Co-operators Financial Services Limited. Copyright © 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 and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors 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 neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.The S&P/TSX Composite is a product of TSX Inc., its affiliates and/or their licensors and has been licensed for use by Co-operators Financial Services Limited. Copyright © 2024 TSX Inc. All Rights reserved. Neither TSX Inc., their affiliates, nor their third party licensors make any representation or warranty, express or implied, as to the accuracy of market representation of any index, or the context from which they are drawn, and shall not be liable for any errors, omissions or interruptions of any index or the data included therein.
Home
Auto
Life
Recreation
