March 2024 Market Commentary

The S&P 500 and the S&P/TSX both generated strong total returns in March of 3.2% and 4.1% respectively, with the TSX outpacing the S&P 500 nicely as commodities picked up momentum mid-month and the ‘Mag 6’ stocks waned from previous highs. This marks the fifth consecutive month of positive returns for the Indices and the best five-month rally in four years. Volatility has been somewhat depressed over this period and the winning streak has investors questioning how long before a meaningful pullback occurs.

Market depth and breadth continues to improve as we see encouraging signs that the market rally is broadening beyond the mega-cap tech stocks. Seasonal tendencies played their part too, with cyclicals leading the markets higher after lagging throughout this rally since Nov23’. The positive move in key commodities like oil, copper and gold helped lift the undervalued TSX to a new high, while the sluggish materials and energy sectors returned 15.4% and 7.3% in March alone to make this one of the best monthly gains for the TSX in years.

In closing the first quarter of 2024 we’ve seen; stronger than-expected growth, hotter-than-expected U.S. inflation, a comeback in commodity prices, even a new record high for crypto, and moreover a +10% return in the S&P 500 for Q1. It leaves many of us asking what’s going on? This is a question we must address in the outlook comments of our monthly commentary, but as sober thoughts regarding rate cuts begin to take hold for the remainder of this year the economic data is beginning to provide a soft-landing narrative. In the U.S., growth is pointing to just over 2% in Q1, which is down from 3.4% in Q4 2023, but lines up nicely with economist’s call of 2.0% on average in 2024. Consumer spending has cooled on both sides of the border through the quarter, but even Canada is getting the better-than-expected growth pat on the back with out-of-the-blue GDP figures, starting with back-to-back monthly gains of 0.6% and 0.4% in 2024 so far. This two-month gain of 1.0% is more growth than we’ve seen in the previous 16 months combined. This has prompted the BMO economics team to boost their GDP call for Canada to 1.2% in 2024 and they remain steadfast in their call of four rate cuts this year, beginning at the June meeting.

For a full copy of our March 2024 market commentary, please email us at msbwealth@nbpcd.com