Global Asset Allocation Team Market Update – October 2024

The MSCI All Country World (+2.2%) hit a fresh record in September. The S&P 500 rose 2.0%, while the S&P/TSX gained 2.8% and the MSCI EAFE advanced 0.6%. The MSCI gauge of emerging market stocks (+6.5%) outperformed its developed market peers by a wide margin, thanks to a remarkable rally in Chinese equities after Beijing’s slate of stimulus measures administered a shot of adrenaline to risk assets.

Fixed income markets also generated positive results as traders braced for aggressive rate cuts from major central banks. Yield curves steepened in a bullish fashion, with the policy-sensitive short-end falling by much more than longer-dated yields. For the month, the Bloomberg US Aggregate Bond Index rose 1.3%, while the FTSE Canada Bond Universe gained 1.9%.

The US dollar (-0.9%) extended its losing streak on expectations the Federal Reserve is still on track for more rate cuts in the coming months. The greenback was weaker versus most of its major peers, with the euro (+0.8%), pound (+1.9%), and yen (+1.8%) all appreciating last month. By contrast, the Canadian dollar (-0.2%) retreated on the back of the sharp decline in oil prices and as traders ramped-up their bets for a jumbo 50 basis point rate cut at the Bank of Canada’s next meeting.

Finally, oil (-7.3%) tumbled lower in September, with headwinds on both the supply-side and the demand-side pushing crude below $70. Saudi Arabia is reportedly preparing to restore some production to regain market share, while a worrisome demand outlook from top importer China also weighed on prices. Gold (+5.3%) hit a fresh high on the back of soft dollar conditions and the decline in treasury yields that boosted the appeal of the non-interest-bearing precious metal. Copper (+9.8%) rallied strongly towards month-end after Chinese authorities surprised investors with a major economic rescue package aimed at shoring up the world’s top consumer of the red metal. Measures were put in place to rejuvenate the slumping properly market, a pillar of metals demand.

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