The final quarter of 2024 presented mixed market performances and evolving macroeconomic dynamics. U.S. equities continued to perform well, particularly large and mid-cap stocks, bolstered by optimism surrounding deregulation and a business-friendly environment under the re-elected administration. International and emerging market equities lagged the U.S. reflecting broader global challenges, including geopolitical fragmentation, a stronger U.S. dollar, and trade tensions.
In the third quarter of 2024, under the weight of previous central bank interest rate increases, global growth continued to slow. But in September, the U.S. Federal Reserve made its first interest rate cut this cycle, joining the Bank of Canada and other central banks who had already begun reducing rates due to retreating inflation. This has provided some relief for certain households and businesses who have been struggling with a higher interest rate environment. While the path of inflation and interest rates are never certain, we are now on the easing side of this cycle.
Read moreThe second quarter of 2024 saw a continuation of the key themes from the first quarter, as strength in public equity markets was led largely by artificial intelligence related companies. Even the utilities sector enjoyed an AI related boost given expectations that more data centers should lead to increased electricity demand.
Read moreThe first quarter of 2024 saw a divergence in fortunes between equity and fixed income markets. Equities continued surging forward thanks to resilient global economic data while bonds suffered from rising yields. Strong corporate earnings, positive sentiment around the potentially transformational impact of artificial intelligence, and expectations of eventual rate cuts also provided fuel to rocket equities higher. From a regional perspective, developed markets continued to outperform their emerging market peers mainly due to continued economic challenges in China.
Read moreThe last quarter of 2023 was a stellar period for equity and bond markets with strong returns across both asset classes. Equities and bonds moved higher as bond yields decreased and market participants became increasingly optimistic about the possibility of central banks achieving a soft landing. At this point we have seen inflation wane without a significant effect on economic growth, the goldilocks scenario for markets, though the delayed effects of monetary policy may still be working their way through the economy. The U.S. Federal Reserve kept policy interest rates steady during the period and while it is by no means a foregone conclusion, the market is anticipating interest rate cuts in the U.S. in 2024.
Read moreAfter starting off positive, global equity markets finished the quarter in negative territory as developments in the period took some wind out of the markets’ sails. Market sentiment was impacted by the U.S. Federal Reserve indicating that interest rates may remain higher for longer, prompting a rise in bond yields across the curve. The U.S. dollar has also been strong, as the U.S. economy hasn’t witnessed the degree of weakness seen in other parts of the world. The third quarter ultimately saw the return of simultaneous declines of bonds and equities.
Read moreGlobally, equity markets continued to be resilient in the second quarter, with U.S. equites being among the stronger performers. U.S. equity strength was driven by a handful of large technology-focused companies, including some that have been in the spotlight as notable advancements in artificial intelligence dominated news headlines.
Read moreEquity markets were resilient in the first quarter of 2023, finishing with a strong positive return despite ongoing recession risks.
Read moreEquity markets had a positive return in the fourth quarter offering a brief reprieve from the turmoil that roiled markets in 2022—although December saw many give back some of these gains. In the end, 2022 goes down as a difficult year for financial markets dominated by widespread inflation, higher interest rates, geopolitical tensions, and global growth concerns. The U.S. Federal Reserve continued to raise policy interest rates, and the path forward remains uncertain.
Read moreNumerous equity markets declined (in local currency terms) during a volatile third quarter, despite some optimism early in the period that led to a brief rally. Many central banks have continued to hike interest rates and the U.S. Federal Reserve has been unequivocal about its plan to fight inflation; ultimately, how far and how fast the U.S. Federal Reserve will go has been a key factor driving markets.
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