Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.
You can catch up on the past four weeks’ Weekly Update in the link to my Blog.
Read my latest Smart Investor newsletter on my website. The Q4 2024 edition covers Market Review for first nine months of 2024, a discussion about lower interest rates, as well as the U.S. presidential election. Shiuman’s Corner is about my first ride in the RBC Granfondo Whistler.
Markets
Market scorecard as of close on Friday November 22, 2024.
| Country | Equity Indices | Level | 1 week | YTD |
| Canada | S&P/TSX Composite | 25,444 | 2.2% | 21.4% |
| U.S. | S&P 500 | 5,969 | 1.7% | 25.1% |
| U.S. | NASDAQ | 19,004 | 1.7% | 26.6% |
| Europe/Asia | MSCI EAFE | 2,274 | 0.0% | 1.7% |
Source: FactSet
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TSX closed higher in Friday afternoon trading, off best levels at new all-time high. Most sectors higher led by industrials. TSX recorded a 2.2% weekly gain.
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US equities ended higher Friday, locking in a solid weekly gain, as earnings season begins to wrap up. All major indexes are higher, with the Nasdaq Composite being the best relative performer.
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Following strong equity market performance in 2024, the S&P 500 is now trading at a forward price-to-earnings ratio of nearly 22x. Given the fact that further multiple expansion from these levels appears limited, future market gains look increasingly dependent on strong earnings growth, with FactSet consensus estimates projecting S&P 500 earnings per share to grow at a 13.8% compound annual growth rate in 2025 and 2026.
Economy
Canada
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Headline inflation edged higher in October, driven by a smaller decline in energy price growth. With October’s reading at 2% (year-over-year), headline CPI has remained remarkably stable around the 2% target for three consecutive months.
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Despite a firmer inflation reading than economists were anticipating, we don’t expect this report to derail the BoC from its current dovish posture. In fact, RBC Economics is still expecting a cut of 50 basis points in December.
U.S.
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The Canadian dollar slipped to a four-year low against the U.S. dollar. The loonie finally dipped below the $0.72–$0.76 range that it had traded in for more than two years, falling as low as $0.71 this month. Its decline reflected a number of factors, including growing expectations for policy divergence between the Federal Reserve and Bank of Canada, which caused spreads between U.S. and Canadian government bond yields to reach their widest levels in several decades.
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Donald Trump’s election victory and a Republican sweep, which provided broad support to the U.S. dollar, also weighed on the exchange rate. That said, the Canadian dollar has been one of the best-performing currencies in November, declining the least against the U.S. dollar, amid a generally improving risk appetite, as well as expectations that the Canadian economy will be less exposed to potential tariffs under the Trump administration.
Further Afield
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Japanese Prime Minister Shigeru Ishiba is expected to announce an economic stimulus package slightly larger than last year’s version. According to public broadcaster NHK, the ¥21.9 trillion (US$140 billion) package will help address the challenges of inflation through support for low-income households and wage growth, and include subsidies for gas and electricity bills.
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I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.
Regards,
Shiuman