[Fall 2024 GPS] Markets And Your Portfolio

Equities and fixed-income securities concluded the third quarter on an upward trajectory, as declining inflation and interest rate reductions helped the market recover from the declines in early August and September. Markets continue to react positively, as investors anticipate rate cuts in response to inflation continuing to normalize, and unemployment's rates ticking up.

A series of economic stimulus announcements ended a multi-year slump as Chinese stock markets soared from Sept 24 to Sept 29. Oil prices declined throughout the quarter and slipped further in September on news that The Organization of the Petroleum Exporting Countries (OPEC) would boost output in the face of reduced demand growth in an already oversupplied market. Gold continued its year-long advance and posted its largest quarterly gain since 2016.

In Canada, inflation, unemployment, and growth data were mixed across Q3 leading the Bank of Canada (BoC) to cut by a quarter-point on September 4. Governor Macklem noted that the decision was partly motivated by the need to support economic growth. On October 23, the Bank of Canada decided to cut another 50 basis points, in acknowledgment of weaker than expected economic output as inflation continues to trend below 2%. Similarly, the long-awaited U.S. rate cut reflected the Fed's growing confidence that inflation is under control and an alertness to the economic risks of sustained high interest rates. The 50-basis point cut was larger than expected lowering the federal funds lower rate to 4.75%. The next Fed rate decision is November 7.

If the declining trend in inflation and interest rates continues, we expect markets to benefit, as the decreasing rates and improving real wages should bolster GDP through 2024 and 2025. Decreased interest rates typically diminish the appeal of cash and renew interest in equities and bonds.

With many companies and stock indices hitting all-time highs several times in 2024, many of our clients wonder when and how it will end. Although we think the markets are due for a correction, our investment approach won’t change. We believe "time in the market" is more important than "timing the market". It is essential to take a disciplined approach to investing and stay focused on your long-term goals. This mindset helps keep your emotions out of investing and avoid mistakes like buying high and selling low or exiting the market only to miss out on future gains while waiting for the right time to buy back in.