Canadian pension plans have shown remarkable resilience in 2024, achieving a substantial median return of 10.6% for the year, despite facing significant market volatility. According to the Northern Trust Canada Universe, the plans recorded a 1.5% increase in the fourth quarter alone. This strong performance is attributed to various factors, including economic growth, geopolitical tensions, inflation, and monetary policy shifts. The S&P/TSX Composite Index, which tracks Canadian equities, rose by 3.8% in Q4 and an impressive 21.7% for the year, with the Information Technology sector leading the charge. [32cfe43c]
In the broader context, U.S. equities also fared well, with the S&P 500 Index gaining 9.0% in Q4 and an impressive 36.4% over the entire year. However, emerging markets faced challenges, as the MSCI Emerging Markets Index fell by 1.9% in Q4 but managed to advance 17.9% for the year. The MSCI EAFE Index, which tracks developed markets outside of North America, dropped by 2.1% in Q4 but gained 13.8% for the year. [32cfe43c]
Monetary policy played a crucial role in shaping market conditions. The Bank of Canada cut interest rates by 50 basis points to 3.25% in December, while the U.S. Federal Reserve maintained a cautious stance, reducing rates by 25 basis points to a range of 4.25-4.50%. These decisions were made in response to evolving economic indicators and inflation concerns. [32cfe43c]
In a significant political development, Donald Trump was elected as the 47th president of the United States, which is expected to have implications for economic policies and market dynamics moving forward. The European Central Bank (ECB) also cut rates twice to 3.0%, while the Bank of England (BoE) held rates steady at 4.75% in December, reflecting a global trend of cautious monetary policy adjustments. [32cfe43c]
As of December 31, 2024, Northern Trust Corporation reported assets under custody of $16.8 trillion and assets under management of $1.6 trillion, underscoring its significant role in the asset management sector. The discussions surrounding these financial trends were also highlighted in a recent episode of the Animal Spirits podcast, which explored various economic indicators and market performance issues, including the impact of rising home prices on young Americans and the challenges facing the U.S. economy as the leading global economy. [e028dcd5][8e9345d7][680074ce][e071e614]