Market Update December 2024
The S&P 500 is up over 6.5% since the first interest cut by the Federal Reserve in September. Likewise, the TSX here in Canada is up over 15% since the Bank of Canada started cutting rates back in June.
Both Canadian and U.S. markets have been strong since my October letter as we have entered a period technically (November – April) that has been the strongest part of the calendar year for markets historically.
Remember that markets are forward looking or often ahead of the actual underlying economy. This is the only way for me to explain the Canadian market given current weak GDP growth and low productivity. I note too, that Canada’s energy policy appears inverse to that of the incoming U.S. administration.
For me, the election result was a surprise in that one side captured both the White House and Congress. This means that policy changes may come more easily.
More recently, an appointment has in part, impacted a sector of the market when Mr. Trump appointed Robert Kennedy Junior (RFK) for Health. This appears to have coincided with some selling in the pharmaceutical sector.
That department oversees the CDC, FDA, NIH, CMS along with other agencies related to human health. Kennedy is a well-known Pharma skeptic, who plans to drastically change healthcare and health regulations. Many healthcare stocks, especially vaccine manufacturers have sold off because of this news. It is still unclear what specific policy changes that RFK will implement.
That said, healthcare is generally a resilient industry that handles short term volatility well, and tends to recover due to the inelastic nature of the underlying product demand. Much of the recent pullback appears to stem from uncertainty rather than clearly defined outcomes that would directly harm healthcare companies.
I believe we may see some near-term volatility in markets over the near-term from the coming change of U.S. government.
Earnings remain strong on both sides of the border and three banks, Royal, National and Commerce raised their dividends with earnings announcements in the last week.
Markets…
Canada’s TSX is up 22.86% ytd
S&P 500 (SPX) The U.S. broad market index is up 27.54% ytd
Nasdaq the technology laden index is up 31.94% ytd
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I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.
Best,
National Bank Financial
Rob Hunter
Senior Wealth Advisor
Sources: Stockcharts.com, National Bank Economics, Evolve ETFs
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