Earnings growth is expected to broaden beyond mega-cap technology and become more balanced in the coming quarters. This shift is driven by positive operating leverage and margin growth in other sectors. We are hopeful for a more diversified and resilient earnings landscape.
BoC Rate Cut: Good News for Mortgage Rates in Canada
The Bank of Canada (BoC) recently cut interest rates for the second time in as many months, lowering the overnight rate target to 4.5%. This move is expected to provide relief to Canadian mortgage holders and other borrowers. The BoC's action is in response to an improved inflation outlook, with further rate cuts anticipated later this year.
What’s driving the rotation into small-cap stocks?
Volatility has returned to equity markets, marked by a notable decline in mega-cap tech stocks. However, small caps have outperformed, with the Russell 2000 index up over 9% since mid-year. This shift is driven by cooling inflation, a strong consumer sector, and the expectation of Federal Reserve rate cuts. The broadening performance across the equity market suggests a continued positive trajectory for small and mid-cap stocks.
How the investment world is trying to navigate geopolitics
Investors are increasingly factoring in geopolitical risks amidst ongoing conflicts and political volatility. The Financial Times highlights how industry leaders are now consulting political scientists to navigate these complexities. Despite the rise in geopolitical concerns, markets have remained relatively buoyant, underscoring the need for a balanced approach in portfolio management.
We will keep a close eye on these developments and provide you with timely updates and insights to help you navigate the evolving financial landscape. Thank you for your continued trust and partnership.