December 2024 Market Recap

Overall, it has been a very positive year for stocks, bonds, and alternative investments like gold and bitcoin. While there are many reasons for each, the main driver has been the continued lowering of interest rates.

December started off positively, as interest rates continued the trend downwards. The Canadian economy continues to struggle in the face of uncertainty about tariffs, potentially starting in the New Year with the inauguration of the new U.S. President. In reaction, the Bank of Canada reduced the overnight rate by ½%. The American economy continues to power ahead but inflation has softened, so the U.S. Federal Reserve decreased their rate by ¼%.

The smaller U.S. rate cut disappointed investors. In addition, given the relative strength of the economy in the States, the U.S. Fed then forecast fewer than expected rate cuts for 2025. This caused a fairly significant sell-off in equities in both Canada and the U.S. to finish off the month.

The threat of tariffs made by President Elect Trump has caused a great deal of anxiety amongst Canadians and Canadian businesses. While the government has made overtures in an attempt to placate the major complaints around the border that Donald Trump seems to have, there has been no indication that they have had any effect. Politically, it seems Prime Minister Trudeau’s time is up and we do not have a strong negotiating position. We can all expect continued angst and worry until this issue is resolved.

Mike

Disclaimer:

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Michael Stott, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.