In his Q4 commentary, IPC Private Wealth Portfolio Manager Simon Bowers notes that the stock markets in 2024 experienced a remarkable year, with Canadian and U.S. equities reaching all-time highs.
In Canada, the TSX surged as investors sought higher yields following Bank of Canada rate cuts, while U.S. markets were propelled by the “Magnificent Seven” tech giants, driven by their dominance in AI and strong cash reserves. Inflation pressures eased significantly, with U.S. CPI at 2.7% and Canada’s at 1.9%, signalling potential for modestly lower rates, though not returning to near-zero levels.
Looking ahead, Simon expects equity performance to remain strong, supported by earnings growth and improving balance sheets, though replicating 2024’s gains seem unlikely. He notes that political changes add uncertainty, as Justin Trudeau’s resignation initiates a leadership transition and eventual election, creating potential market volatility.
In the U.S., Donald Trump’s return to the presidency raises questions, as his leadership is expected to mirror his previous term, characterized by policy unpredictability, debt increases, tax cuts, and tariff threats. Simon feels that tariffs, which are inflationary and often misunderstood, could disrupt global trade, though their actual implementation may differ from publicized intentions.
Globally, political and economic uncertainty persists, but long-term market trends suggest resilience. Simon believes that advisors can play a crucial role in navigating these turbulent times by helping investors assess their portfolios, manage risk, and stay focused on long-term goals.
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