Q2 2024 Market Update: A Mixed Bag of Performance
!Market Update
All index returns are total return (includes reinvestment of dividends) and are in Canadian Dollars unless noted. Sources: MSCI, FTSE, TMX, S&P
As we dive into the second quarter of 2024, the market landscape presents a blend of highs and lows. While many equity indexes showed positive trends, some sectors faced challenges that left investors pondering their next moves.
Canadian Stocks Struggle Amidst Global Gains
In Canada, the S&P/TSX Composite Index dipped by 0.5% this quarter but still boasts a 6.1% increase year-to-date. The S&P/TSX Small Cap Index fared slightly better with a modest gain of 0.2% for the quarter. In contrast, U.S. markets continued their upward trajectory; the S&P 500 surged by 4.3% in Q2 and is up an impressive 15.3% for 2024 so far.
The tech-heavy Nasdaq Composite led the charge with an 8.3% quarterly gain (18.1% YTD) while small-cap stocks represented by Russell 2000 saw a decline of 3.6%, though they remain up by 1% this year.
International Markets: EAFE and Emerging Markets Shine
Looking beyond North America, EAFE stocks (Europe, Australasia, and Far East) remained flat for Q2 but have shown resilience with a remarkable rise of 9.1% in H1 2024 according to MSCI data—an encouraging sign for global investors! European equities lagged slightly behind with a loss of 0.5%, while Japan’s Nikkei dropped by -1.5%, yet it remains strong at +18.3 YTD.
Emerging markets stood out as one of the best performers during this period; the MSCI Emerging Market Index gained an impressive 5.3% in Q2, bringing its total increase to about 9.% YTD, showcasing their potential despite being overlooked by many investors.
Interest Rates on Hold?
In June, Canada’s central bank cut interest rates by 25 basis points, suggesting that we may have reached peak interest rates after years on an upward trend—good news for borrowers! Analysts now predict fewer rate cuts than previously anticipated throughout 2024.
Fixed income investments reflected mixed results; while Canadian fixed income performed relatively well—with FTSE Canada Universe Index gaining 0.9%, U.S fixed income lagged behind due to varying performances across different corporate indexes from Bank of America (BoA).
Real Estate Investment Trusts (REITs) Underperforming
Unfortunately for real estate enthusiasts, REITs struggled significantly during this quarter—the S&P/TSX Capped REIT Index plummeted 6.% in Q2 alone and is down 6.7 % overall this year—a stark reminder that not all sectors thrive simultaneously!
Commodities: Oil Prices Dip While Others Rise
Oil prices took a hit this quarter with losses around -2.%, contrasting sharply against other commodities which helped lift Bloomberg’s diversified commodities index up +1.5%. This highlights how fluctuations within specific commodity markets can impact broader indices differently.
Portfolio Performance Insights
For those invested through ModernAdvisor portfolios, performance was generally positive during Q2—higher-risk portfolios particularly thrived amid robust equity market conditions! The high-interest savings portfolio yielded returns around +1.2 % in Q2 (+2.4 % YTD) reflecting prudent management strategies amidst fluctuating market conditions.
For more detailed insights into our portfolio performance or to explore our factsheets further visit us Important Disclosure
The figures mentioned above represent time-weighted composites across managed accounts at specified risk levels including applicable fees where relevant—all returns are expressed in Canadian dollars unless stated otherwise. This commentary serves educational purposes only—it does not constitute investment advice tailored to individual circumstances or objectives nor does it account for personal risk tolerance or financial situations. Investing carries inherent risks including volatility influenced by economic shifts both domestically and internationally—diversification may mitigate some risks but cannot eliminate them entirely. By keeping abreast with these developments you can make informed decisions moving forward as we navigate through what promises to be another dynamic year ahead!
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