January 2025


In this 2024 review, we note that one of the bigger global events was the U.S. presidential election which resulted in the Republicans gaining control of both the House and the Senate. President-elect Trump’s victory was seen by many as a convincing victory and with it a strong mandate to enact many of his campaign promises, including tariffs (see Chart of the Month). Despite the volatility that this new administration might bring, last year’s financial markets seemed much like a repeat of 2023.

The global economy continued to expand, albeit at a sub-par pace. America led the way in the developed world while India’s growth rate landed in the pole position among emerging nations. Inflation continued to slide with the pace of progress noticeably slowing into the back half of 2024.

That did not deter the global monetary easing cycle, with central banks cutting interest rates 148 times more than they raised them through the calendar. Global equities posted well above-average returns, with tech-heavy indexes leading the way. Global bonds struggled, again. Short-duration and lower quality issues outperformed. Among the major commodities, gold and natural gas shone. Meanwhile, the U.S. dollar was stronger against all of the major currencies. Even though the loonie struggled against the U.S. dollar, it showed middling performance versus its peer group.

 

 

Chart of the Month: Uncertainty Surrounding Trade has Reached a New High

 

 

 

Performance Summary: A continuation of 2023

 

 
 
  • The relative order of performance across the assets in 2024 was like 2023. Equities, particularly U.S. mega-caps, were found at the top of this year's leaderboard. European banks also remained strong in 2024 with an even higher return in local currency terms.
  • Global sovereign bonds had a lacklustre year and finished at the bottom to continue the trend from 2023. Credit fared better and was in the middle of the pack with lower returns compared to last year.
  • Commodities standout as one of the few asset classes with a strong reversal in 2024. Broad commodities posted a positive return this year with gold bullion posting the strongest return.

 

 

The Outlook for 2024 GDP Brightened as the Year Progressed;

BRIC Nations’ GDP Growth Led the Way

 

 
 
  • Forecast revisions for 2024 GDP growth were generally positive throughout the year.
  • Relatively strong growth out of the BRIC countries helped to lift global GDP while India’s economy led the way among the G20 nations.

 

Developed Market Inflation Receded while

Emerging Market Prices Increased at a Double-digit Pace

 

 
 
  • Headline CPI for the developed economies accelerated, while the core measure stabilized, in the back-half of 2024 following more than a year of disinflation.
  • Meanwhile, Emerging Market CPI inflation decelerated into year-end from 12.2% in May to 10.7%, after initially climbing higher to start the year.

 

 

Inflation across the Majors is Within or Close to “Target”

 

Country Price Inflation vs Targets (%)
Current CPI
Inflation Target +/-
2.7 2.0 0.7
2.3 <2.0 0.3
2.9 2.0 0.9
2.6 2.0 0.6
1.9 2.0(+/-1) In Range
2.1 2.0-3.0 In Range
2.2 1.0-3.0 In Range
0.7 <2.0 In Range

As of December 31, 2024

Source: 1832 Asset Mgmt, Bloomberg

 
 
  • The level of inflation for many of the major economies has moved closer to or within their respective central banks’ targets. It is interesting to note that Japan, an economy that has struggled with deflation, now has the highest headline inflation reading among the big, developed economies.

 

 

Monetary Policy Makers on the Easing Path

 

 

 
 
  • Central banks around the world started lowering their policy rates, on net, in October 2023 and kept going throughout 2024. In the past year, there was a total of 148 net rate cuts.
  • The U.S. had a relatively late start in joining the easing party, with the Federal Open Market committee’s first cut delivered at the September meeting.

 

Global Equity Performance was Led by U.S. Stocks

 

 
 
  • Global equity benchmarks have marked another positive year in 2024 with performance leadership provided by U.S. equities again. For the U.S., 2024 marked the second consecutive year when the total return for the large-cap benchmark was ≥ 25%.

 

 

S&P 500’s 2024 Return stood at the High-end of History

 

 
 
  • The S&P 500’s return ranks in the top quartile looking back through a century of its own history.
  • Meanwhile, its max drawdown of 8% within the year was well below the “typical” year’s -13%.

 

 

Top and bottom Performers, by Country: Don’t Cry for Me Argentina…

 

 
 
  • Argentina’s stock market rose by almost 180% in 2024 which was 70 percentage points better than the next best country’s benchmark, Venezuela. The S&P 500 and TSX both beat the median return of 11.9% with 23.3% and 18.0% returns, respectively.
  • Latvia’s -34.9% and Bosnia & Herzegovina’s -24.8% represented the biggest declines for the year.

 

 

Global Sectors: Sector leadership was similar to last year

 

 

 
 
  • The similar shape of 2024 (blue) and 2023 (dotted green) suggests that the relative order and magnitude of performance for global sectors was comparable. This is in stark contrast to 2022 which had a completely different leaderboard.
  • Information Technology (+31.9%), Communication Services (+31.9%) and Financials (+25.1) led all global sectors in 2024. Upside participation was relatively broad with all groups having a positive contribution to the MSCI ACWI’s +18.0% annual return.

 

 

US Mega-Cap Surged while Crypto Names Cooled

 

 
 
  • Mega-cap US names, namely the Magnificent 7, were among the strongest performers in 2024. This is followed by broad technology (NASDAQ-100) then broad equities (S&P 500). Interestingly, semiconductors in aggregate lagged the S&P 500 which suggests that, outside of NVIDIA, the majority of names did not outperform.
  • Crypto-currency sensitive equities returns were spectacular in 2023 as suggested by the 224% return of GS Bitcoin Sensitive Equites Basket that year. In 2024, however, these names cooled off except for MicroStrategy, NVIDIA Corp, and Terawulf which posted triple digit gains.

 

 

 

Global Equities: Biggest winners and losers (common currency terms)

 

 
 
  • Software company AppLovin (U.S.) with its mobile technology led all global mid-large names with its +413% rise in 2024. The top 10 performers also featured a few other technology names including Cambricon Technologies (China), Palantir (U.S.) and NVIDIA (U.S.). The remaining names were spread out across different industries including defense, energy and fintech.
  • The bottom of world's equity performance ladder includes several names in Asia spread across several sectors including technology and energy. Among the worst was Energy Absolute, a firm specializing in the research, development and production of biodiesel products in Thailand.
  • Within the US, performance broadened to include names further down the market cap scale. Only one name from the Magnificent 7, NVIDIA, made the list in 2024. Additionally, more sector representation was seen in 2024 compared to 2023.

 

 

 

Global Bond Markets Struggled

 

 
 
  • A budding rally in the bond market, which began in the summer of 2024, fizzled in the latter part of 2024.
  • Global bond yields remained elevated, lingering near the upper-end of their 15-year range, to close out the year.

 

 

Very few Regional Winners in Bond-land

 

 
 
  • Positive returns were scarce across the country bond markets in 2024 with China and the U.S. in leadership positions.
  • Meanwhile, Japan not only had the worst performing bond market among the major economies, but it more than doubled New Zealand’s decline (the second worst) with a -13.1% return.

 

Credit was favored in 2024 while duration lagged

 

 
  • Longer-dated (i.e., 10+ year) global bonds were down -5.5% during this past year, underperforming their shorter-dated counterparts by about 560 basis points. Looking at the quality spectrum, lower-quality Baa bond returns were slightly positive at +0.6% while their Aaa equivalents were down -3.6%.

 

 

Watch out for the Price of Caffè Mochas

 

 
 
  • Two of the biggest price gainers in the commodity space were realized in coffee and cocoa. Natural gas and gold prices were also notable leaders.
  • At the other end of the spectrum, soya beans, cotton and wheat prices were the biggest decliners.

 

Currency Performance Against the Canadian Dollar

 

 
 
  • The Canadian dollar’s performance was mixed in 2024 gaining against Mexico as well as its commodity-driven peers such as Australia, Norway and New Zealand.
  • The loonie lost ground against the Hong Kong and U.S. dollar as well as the major European currencies.

Market Performance

 

7 Day 1-mo 3-mo 12 Mo QTD YTD
S&P 500 -2.6% -2.5% 2.1% 23.3% 2.1% 23.3%
S&P 400 -1.2% -7.3% 0.0% 12.2% 0.0% 12.2%
S&P 600 -1.4% -8.1% -1.0% 6.8% -1.0% 6.8%
S&P 500 Energy 1.2% -9.6% -3.2% 2.3% -3.2% 2.3%
S&P 500 Materials -1.7% -10.9% -12.8% -1.8% -12.8% -1.8%
S&P 500 Industrials -1.9% -8.1% -2.7% 15.6% -2.7% 15.6%
S&P 500 Consumer Disc -5.0% 2.3% 14.1% 29.1% 14.1% 29.1%
S&P 500 Consumer Stap -1.6% -5.2% -3.8% 12.0% -3.8% 12.0%
S&P 500 Health Care -1.3% -6.4% -10.7% 0.9% -10.7% 0.9%
S&P 500 Financials -1.5% -5.6% 6.7% 28.4% 6.7% 28.4%
S&P 500 Technology -3.5% 1.1% 4.7% 35.7% 4.7% 35.7%
S&P 500 Comm Services -3.1% 3.5% 8.6% 38.9% 8.6% 38.9%
S&P 500 Utilities -1.1% -8.1% -6.2% 19.6% -6.2% 19.6%
TSX -0.5% -3.6% 3.0% 18.0% 3.0% 18.0%
TSX 60 -0.5% -3.7% 3.0% 17.2% 3.0% 17.2%
TSX Energy 1.3% -4.3% 5.4% 18.2% 5.4% 18.2%
TSX Materials -1.0% -5.5% -5.1% 19.3% -5.1% 19.3%
TSX Industrials -0.9% -3.9% -0.7% 8.5% -0.7% 8.5%
TSX Consumer Disc -0.7% -3.1% 0.3% 9.5% 0.3% 9.5%
TSX Consumer Stap -1.0% -0.8% 3.3% 17.3% 3.3% 17.3%
TSX Health Care 0.8% -4.5% -4.2% 5.7% -4.2% 5.7%
TSX Financials -0.2% -1.8% 5.7% 25.0% 5.7% 25.0%
TSX Technology -3.1% -4.2% 22.1% 37.7% 22.1% 37.7%
TSX Telecom 0.8% -10.9% -20.8% -26.5% -20.8% -26.5%
TSX Utilities -0.6% -3.5% -2.6% 8.6% -2.6% 8.6%
WTI Crude 2.3% 5.9% 6.5% 3.0% 6.5% 3.0%
Gold 0.3% -0.7% -0.4% 27.2% -0.4% 27.2%
Copper -2.0% -2.7% -12.0% 1.8% -12.0% 1.8%
US 10-yr Treasury (bps) -2 40 79 69 79 69
10-yr BoC Bond (bps) -7 14 27 12 27 12
USD per CAD -0.2% -2.6% -6.0% -7.9% -6.0% -7.9%

As of December 31, 2024.
Source: Bloomberg