Equity markets opened this year with a continuation of the strong performance seen in 2023.
The S&P 500 continues to rise, achieving record highs. The labour market has proven resilient and consumer spending remains steadfast in the U.S.
The exact timing of Fed rate cuts remains uncertain. However, ongoing disinflation is expected to support a loosening of monetary policy throughout the year, which should be advantageous for equities.
The outlook in Canada is also better than most expected, however moving at a slower pace. The improving economic outlook has implications for monetary policy, with inflationary pressures easing.
Looking ahead to 2024, there are five significant reasons to stay optimistic:
- Retail fund flows are up, indicating a shift towards equities.
- An incumbent is on the presidential ballot, historically leading to positive stock market performance.
- The Fed is not expected to raise rates further, leaving room for the market to advance.
- Inflation numbers are cooling, allowing the central banks to adopt a less hawkish stance.
- Market breadth has turned positive, suggesting further upside for equities.