Key Takeaways January 2025
North American Market Overview
- Strong 2024 Performance: North American equity markets performed exceptionally well in 2024, though profit-taking occurred late in the year.
- Policy Uncertainty: Concerns over leadership transitions (e.g., Trump inauguration, Trudeau resignation) and policy directions weigh on investor sentiment.
U.S. Equities
- Major Indices Performance (2024):
- NDX: +29%
- SPX: +25%
- Dow: +15%
- YTD 2025 Mixed Signals in Jobs and CPI Data:
- Strong job growth triggered rate hike concerns.
- Controlled inflation (December CPI) eased market fears, stabilizing equities.
U.S. Interest Rates
- Rate Expectations Adjusted:
- Fewer rate cuts expected for 2025 due to robust labor market data.
- Market now anticipates one rate cut, with potential for a rate hike depending on economic strength.
Canadian Equities
- Performance (2024):
- S&P/TSX Composite Index: +22%, driven by energy, financials, and materials.
Trudeau Resignation Impacts
- Policy Continuity: Leadership transition may alter federal programs (energy, tax, infrastructure).
- Trade and International Relations: Changes to trade agreements (e.g., tariffs) could influence investment sentiment.
- Sector-Specific Impact: Resource taxation and environmental measures may shift, affecting natural resources and tech innovation.
- Monetary and Fiscal Policy: New fiscal policies could indirectly impact inflation and interest rates.
Canadian Fixed Income
- Bond Market Trends:
- Ishares Core Canadian Universe Bond Index ETF (XBB): +1.00% in 2024
- Persistent inflation and global influences are driving higher yields and declining bond prices.
Global Equities
- Global Market Performance:
- MSCI All Country World Index: +17.50% in 2024.
Investment Strategy
- Risk Management:
- Partial equity exposure reduced; rebalancing to target weights.
- Focus on diversification, strong fundamentals, and resilience.
- Active Monitoring:
- Adapting to shifts in fiscal policies, global trade, and energy prices.
- Ready to adjust asset allocation and sector exposure in response to market volatility.