Monthly highlights of major events which drive financial markets, along with perspectives on what they mean and why they matter.
September in review
Markets continued to deliver solid performance in September as inflation continued to decline in many economies across the globe. While the possibility of a near term recession remains a concern for investors, indicators suggest a “soft landing” is likely, and markets have responded accordingly. Canadian stocks ended the month up 3.15% on broad gains with all sectors, except energy, finishing the month in positive territory; the Health Care sector saw the largest gains, increasing 14.46% month-over-month (MoM). U.S. stocks continued to climb, gaining 2.14% in U.S. dollar terms for the month, with eight of eleven S&P 500 sectors positive. Commodities were mostly higher, as gold and natural gas were up 5.21% and 17.01%, respectively, while WTI crude oil fell 6.17%. Both Canadian and U.S. bonds were higher, up 1.90% and 1.58%, respectively, benefiting from recent rate cuts by the Bank of Canada (BoC) and U.S. Federal Reserve (the Fed). Emerging Market equities gained 6.68%.
Here are some of September's most notable headlines:
Fed, BoC cut rates to boost growth U.S. Both the Fed and the BoC cut interest rates last month to help stimulate economic growth by reducing borrowing costs for businesses and consumers. These cuts aim to encourage spending, investment, and lending, counteracting slower economic activity, trade uncertainties, and weaker inflation. Lower interest rates make loans more affordable, increasing consumer spending on big-ticket items like homes and cars, and encourage business investments in expansion and innovation. Central banks have played a delicate balancing act when making recent policy decisions, aiming to combat inflation while creating a favorable economic environment that supports growth and mitigates risks from economic slowdowns and global trade tensions.
China cuts rates, boosts infrastructure spending to stimulate economy. China introduced sizeable stimulus measures, including interest rate cuts, reduced bank reserve requirements, and increased infrastructure spending, to counter slowing economic growth. These efforts aim to stabilize the economy amid weaker consumer demand, a struggling real estate sector, and global trade challenges by encouraging lending and spurring activity in key industries. As a major player in the global economy, China’s stimulus can positively impact sectors like commodities, manufacturing, and technology worldwide. While the immediate effects are positive, analysts remain cautious about the long-term impact due to ongoing challenges like weak domestic credit demand and global trade tensions.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill (FTSE Canada 60 Day T-Bill) | 0.33 | 3.72 | 5.49 | 183.81 |
| Canadian Bonds (FTSE Canada Universe Bond) | 1.90 | 4.27 | 9.94 | 1,169.37 |
| Canadian Equities (S&P/TSX Composite) | 3.15 | 17.23 | 22.51 | 24,000.37 |
| U.S. Bonds (Barclays U.S. Aggregated Bond, US$) | 1.34 | 4.45 | 8.73 | 2,258.17 |
| U.S. Equities (S&P 500, US$) | 2.14 | 22.08 | 29.83 | 5,762.48 |
| Global Equities (MSCI World, US$) | 1.87 | 19.29 | 27.37 | 3,723.03 |
| Emerging Marketings (MSCI Emerging Markets, US$) | 6.68 | 17.13 | 23.16 | 1,170.85 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | -0.24 | -2.08 | -0.12 | 0.7394 |
| C$/Euro (€) | -1.03 | -2.90 | -2.74 | 0.6640 |
| C$/Pound (£) | -2.11 | -6.76 | -5.39 | 0.5527 |
| C$/Yen (¥) | -1.97 | -0.11 | -1.43 | 106.201 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | 5.21 | 23.11 | 28.01 | 2,659.40 |
| Oil WTI ($/barrel) | -6.17 | -3.51 | -10.89 | 68.17 |
| Natural Gas ($/MMBtu) | 17.01 | -5.44 | -23.30 | 2.92 |
†Total Return, as at September 30, 2024. Indices are quoted in their local currency.
Source: Bloomberg
Indices are not managed, and it is not possible to invest directly in an index.
Oil price volatility up on geopolitical risks. Oil prices declined significantly in September due to several factors: China's economic slowdown led to a fourth consecutive month of reduced oil consumption, global economic uncertainties dampened demand, and investor selling exacerbated bearish market sentiment. Despite some supply disruptions, overall oil supply remained robust, with increased production from the US, Brazil, and Guyana. This combination of steady supply and weakening demand heightened fears of oversupply. Consequently, by the end of the month, WTI crude oil was down 6.17% to $68.17 USD per barrel.
Did you know?
Canadian businesses have historically conducted over half of all research and development (R&D) activities in the country, estimated around 1% of Gross Domestic Product (GDP). In 2022, Canadian businesses increased R&D spending by 9.4% from 2021. Preliminary data for 2023 suggests a slower growth rate of 3.4%, and despite this slowdown, businesses report optimism about 2024, expecting a 4.8% increase. R&D is crucial for innovation, economic growth, and global competitiveness. While the increase in R&D spending is welcomed to help stimulate competitiveness, Canada lags its global peers, spending about half of the Organisation for Economic Co-operation and Development (OECD) average.
