Happy New Year! We hope that your Christmas holidays were restful with family and friends. Below, you will find our monthly market update and relative information that pertains to the current state of the economy.
Market Update
- Most of the market indices closed lower than the beginning of the month.
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- The S&P 500 finished at 5,881.63 pts (-2.35%)
- The DOW finished at 42,544.22 pts (-5.27%)
- The NASDAQ finished at 19,310.79 pts (+0.48%)
- The TSX finished at 24,724.94 pts (-3.59%)
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2024 Market Update
- The markets delivered strong returns in 2024. The market indices all closed higher than the beginning of the year.
- The S&P 500 started at 4,745.20 pts and finished at 5,881.63 pts (+23.94%)
- The DOW started at 37,566.22 pts and finished at 42,544.22 pts (+13.25%)
- The NASDAQ started at 14,873.70 pts and finished at 19,310.79 pts (+29.83%)
- The TSX started at 20,904.25 pts and finished at 24,724.94 pts (+18.29%)
Canada
Monetary Policy
- On December 11th, The Bank of Canada (“BoC”) decided to lower the overnight lending rate by 50bps.
- Currently, the overnight rate is 3.25%, the Bank Rate is at 3.50%, and the deposit rate is at 3.25%.
- This marked the BoC’s fifth straight rate cut, and its second straight at 50 bps, with inflation coming down and economic growth stalling.
- The first interest rate announcement for 2025 will happen on January 29th.
Economic Data
- The annual inflation rate in Canada was at 1.9% in November, slightly easing from the previous months 2.0%.
- The core inflation rate, which excludes more volatile items (food and fuel), was unchanged from the previous month remaining at 2.6%.
- Canadian home sales were up in 2.8% in November compared to October. As well, housing prices have moved materially higher at the national level for the first time in almost a year and a half.
- Statistics Canada says the total number of jobs in December was virtually unchanged for the month as the unemployment rate held steady at 6.8%
U.S.
Monetary Policy
- The Fed announced that there was a change to its federal rate in its December meeting by 25bps.
- The target range for the federal funds rate is 4.25-4.50%.
- The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.
- The first meeting of 2025 will take place on January 28th-29th.
Economic Data
- In November, the annual U.S. inflation rate rose to 2.7% from 2.6% in the previous month. The annual core inflation rate held steady at 3.3% in November
- The U.S. Labor Department’s Bureau of Labor Statistics reported that the U.S. economy added over 227,000 jobs in November which exceeded expectations.
- The U.S. unemployment rate increased to 4.2% in November from the previous months 4.1%.
- Existing home sales in the U.S. rose by 4.8% from October to a seasonally adjusted annualized rate of 4.15 million in November – the highest in eight months.
Global
- European Central Bank (“ECB”) cut its three policy interest rates by 25bps at its December meeting.
- This was the fourth rate cut from the ECB in 2024 in response to relatively soft economic conditions and slowing inflation.
- Exports from China rose by 6.7% year-over-year in November, adding to the 12.7% increase posted in October.
- Exports to the U.S. increased over the month. U.S. companies may be frontloading purchases from China ahead of the potential for increased tariffs from the U.S. on Chinese goods.
- On December 18th, The Bank of England (“BoE”) maintained the bank rate at 4.75%. Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning have dissipated further.
Notes From our Firm
- Canadian Prime Minister, Justin Trudeau, announced his resignation as leader of the ruling liberal part on January 6th.
- Trudeau will remain on as Prime Minister until a new leader is chosen and has requested prorogation to give his party time to run a leadership race.
- This will also bring an end to all legislative business that hasn’t been passed as of yet. To learn more about prorogation CLICK HERE.
As always if you have any questions, please feel free to reach out to us. Or, if you know someone who would like an opinion on their investments or insurance, please connect us! There is no better compliment than a referral from one of our current clients.
The Team, C.R. Smith Financial
Community, Respect, Service & Financial Integrity