Canada's main stock index ticked higher on the final day of 2024, putting a bow on a year that saw impressive gains for North American markets.
The S&P/TSX composite index was up 107.35 points at 24,727.94, led by energy stocks which gained ground on rising oil prices. Strength in the energy sector more than offset losses in other areas, and helped the oil-and-gas-dominant TSX outperform U.S. markets, which all declined Tuesday.
On Wall Street, the Dow Jones industrial average was down 29.51 points at 42,544.22. The S&P 500 index was down 25.31 points at 5,881.63, while the Nasdaq composite was down 176 points at 19,310.79.
But Macan Nia, co-chief investment strategist at Manulife Investment Management, said Tuesday’s losses had more to do with investor profit-taking heading into the new year than any particular news event or negative market sentiment.
“Going into the new year we’ve seen a little bit of a sell-off, very similar to cleaning up your house,” he said.
“I think investors are cleaning up their portfolios — loss-selling, things of that nature — and setting up their portfolios for the beginning of next year.”
The past 12 months have been what Nia called “incredible” for equity investors. The S&P/TSX composite index hit record heights in 2024 and is up 18 per cent for the year.
The S&P 500, which set 57 record highs in 2024, is up about 23 per cent for the year, the Nasdaq is up about 29 per cent and the Dow has gained about 13 per cent.
A primary driver of the gains was the interest rate cuts enacted by central banks around the world as global inflation began to ease. Lower interest rates ease borrowing costs for companies and fuel more economic growth.
Markets also got a boost in 2024 from investor enthusiasm around artificial intelligence. Stocks with exposure to the AI business, such as Nvidia and Super Micro Computer, saw their prices skyrocket, but Nia said it remains to be seen whether those gains can be maintained in 2025.
"Markets have bid up these stocks, but these AI-themed names are now going to have to show that they can monetize the AI trend," he said.
Another theme in 2024 was the resilience of the U.S. economy, which saw solid corporate earnings growth and strong consumer spending throughout the year. The continued strength of the U.S. economy gave investors confidence, even as other global economies faltered.
"One could argue Canada's in a recession — the path for Canada continues to look weak," Nia said.
"Europe has a whole host of economic challenges ... China is facing a lot of challenges, and we will see whether the stimulus they are trying to push through their economy will have an impact. But despite all of these challenging economies globally, the U.S. has been really resilient."
Nia said for the year ahead, he will be watching closely to see what happens with the U.S. economy. The U.S. Federal Reserve has already signalled a more cautious approach to rate cuts heading into 2025, and any signs of inflation remaining sticky in that country could be bad news for stock markets.
The other major story heading into the new year is Donald Trump's return to the White House in January, and the potential policy implications of that.
Nia said the main areas to watch under a Trump administration will be immigration policy, tariff policy and corporate tax policy and deregulation.
North American markets will be closed on Wednesday for the New Year holiday, and Nia said it's a good time for investors to take a breather before the ups and downs of the next 12 months begin.
"The only certainty in life, and in investing, is that there's going to be uncertainty — and 2025 is not going to be any different," he said.
The Canadian dollar traded for 69.50 cents US compared with 69.55 cents US on Monday.
The February crude oil contract was up 73 cents at US$71.72 per barrel and the February natural gas contract was down 31 cents at US$3.63 per mmBTU.
The February gold contract was up US$22.90 at US$2,641 an ounce and the March copper contract was down six cents at US$4.03 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Dec. 31, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Amanda Stephenson, The Canadian Press