Stock and bond markets got off to a rocky start in Q2, 2024. However, as time progressed, their outlooks improved with inflation readings moderating.
Cooling global inflation, as well as weakening domestic consumer trends allowed some Central Banks to shift from rate hiking to rate cutting, with the Bank of Canada being one of the first to cut rates, downshifting by 25 basis points in June from 5.00% to 4.75%.
While promising, the path to monetary easing seems to be a slower journey, and one that is very much so dependent on future inflation, employment, and economic growth data.
This dovish stance had a positive impact on bond prices.
The FTSE Canada Universe Bond Index gained 0.9% in the second quarter. However, it’s important to note that Canadian bonds are still down 0.4% since the start of the year.
Global equities continued to rise in Q2.
U.S. equities, as judged by the S&P 500, were up 4.3% in Q2, with artificial intelligence (AI) stocks continuing to perform strongly. On a year-to-date basis, U.S. equities have climbed 15.3%.
On the other hand, in Canada, the TSX Composite finished the quarter on the downswing, declining 0.5%. The quarter was marked by varied performance, with some sectors outperforming others. Defensive industries led quarterly performance, with the materials sector rising 7.4% and consumer staples rising 4.1%. The worst performing sector, healthcare, fell 18.6%. Despite this, Canadian equities are still up 6.1% since the beginning of the year.
Head of Investments
Yelena Stepanyan is the Head of Investments at Embark. A lover of all things related to the financial markets, she is currently the Chair of the Chartered Financial Analyst Society Toronto's Institutional Asset Management Committee.
