November 2024 Market Commentary

There was a cautious tone heading into November with the U.S. election set to take place in the middle of the first week. The anticipation of increased market volatility was seemingly universal, yet the opposite transpired. The results of the election were achieved the same night, and investors overwhelmingly showed their favour the next morning. Since the election, most stocks in our universe have advanced, except for a select few. TSX strength continued through the month, as the index pulled off a +6.2% gain in November alone; advancing a whopping +1,491 points higher to close at 25,648, which is incidentally 148 points higher than our year end price target of 25,500. November’s finish marks a +22.38% return for the TSX since the beginning of the year. Similarly, in the U.S. the S&P 500 advanced over +326 points to close the month at 6,032.38, reaching a new all-time high during the month and posting a 26% return so far this year.

The top performing stocks on the TSX in November were Shopify, CAE, Air Canada, Celestica, and Methanex, while the worst performing stocks were Curaleaf, Stella-Jones, B2Gold, Barrick Gold, and Franco-Nevada. In the U.S., Tesla rose an incredible +38.2% during the month; seen as benefiting from Trump’s pro-manufacturing and deregulatory policies. Since the election, many stocks have seen double-digit returns. For example, Vista Corp 26.8%, EQT Corp 24%, EPAM Systems 22%, Palantir Tech 21.5%, and Warner Bros 21.2%, to name a few. While the Dow and the S&P 500 have both notched records to cap “Best Month of the Year”, the TSX catch-up trade is unfolding in real time and on pace to outperform the S&P 500 in the second half.

Investors will no doubt be more than happy with their returns this year, especially if the urge to lock-in 5.5% GIC rates last summer was avoided. Regardless, interest rates continue their decline, with the Federal Reserve making a second cut on Nov 7th, trimming its benchmark rate by 0.25 percentage points amid cooling inflation. Whereas in Canada, it is widely expected the Bank of Canada will give Canadians an early holiday gift by cutting rates another 0.25 percentage points at its next meeting on Dec. 11th, lowering the benchmark rate to 3.5%. Recently, consensus around the direction of rate cuts in 2025 has shifted, where a couple of months ago both the Fed and BoC were expected to settle around 3% by June 2025. The emerging thesis now is the BoC could be as low as 2%-2.5% next year, and the Fed is projected to trend around 3.5%. We view this as an increasingly accommodative backdrop for the economy and a tailwind for equities and look for continued momentum in U.S. equities next year with the potential for Canadian equities to perform the same, if not slightly better over the next 12-months.

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