The historic facade of the Toronto Stock Exchange building is visible in Toronto, as captured in a photo by Reuters.
Canada’s primary stock index, the S&P/TSX Composite, wrapped up 2024 with its best annual performance in three years. On the year’s final trading day, the index closed at 24,727.94, reflecting an 18.5% annual gain. Friday alone saw a rise of 107.35 points (0.44%), with energy stocks playing a leading role in the index’s impressive showing.
Brandon Michael, a senior investment analyst at ABC Funds, noted the significance of the market’s momentum in 2024, emphasizing the diverse sectors driving the rally. "This broad-based participation signifies renewed investor optimism and a strong bullish sentiment," Michael said.
The Canadian market wasn’t alone in its triumph. South of the border, the U.S. S&P 500 saw a robust 23% increase, while the tech-heavy Nasdaq jumped nearly 30%, marking its best two-year performance since the late 1990s.
Looking Ahead to 2025
While 2024 was a banner year for equities, the path forward appears less certain. Investors are tempering expectations for substantial Federal Reserve interest rate cuts in 2025. Additionally, political developments, including Donald Trump's anticipated return to the U.S. presidency, are expected to shape market sentiment.
Michael predicts a challenging yet optimistic trajectory for markets in 2025, describing a "sawtooth pattern" of growth with new highs by year’s end. Investors will closely monitor employment data from Canada and the U.S., which could provide crucial insights into monetary policy shifts.
December Decline and Sectoral Strength
Despite 2024’s overall gains, the TSX experienced a 3.4% decline in December, its worst monthly performance since May 2023. The U.S. Federal Reserve’s commitment to hawkish monetary policies, coupled with political uncertainty in Canada, made investors cautious.
However, the year’s final trading day offered a brighter picture. The energy sector surged 1.5%, supported by rising oil prices. Other notable gains included a 1.3% rise in communication services, a 0.9% increase in materials, and a 0.6% uptick in healthcare stocks.
Global Markets and New Year Observance
As the year concluded, most global markets, including Canada’s, prepared for a pause on Wednesday to celebrate the New Year holiday. The TSX’s remarkable 2024 performance sets a high bar for 2025, leaving investors both optimistic and cautious about what lies ahead.
