Market and Investment Outlook 2024 Q3

As we embrace a new cycle of interest rate reductions by the U.S. Federal Reserve and the Bank of Canada, the outlook for equities, especially small-cap stocks, appears promising. Historical data supports the potential for significant outperformance in this sector, given its sensitivity to rate adjustments.

Global Economic Dynamics

The global economy presents a mixed landscape, with positive signals amid lingering uncertainties. While the easing of interest rates provides some relief, the full impact of prior high rates on consumer spending and economic activity is yet to unfold. Our cautious optimism is based on stable fundamental indicators, although we remain alert to any signs of economic slowdown that could dampen market momentum.

Opportune Time for Small-Cap Stocks

Given the historical resilience of small-cap stocks during similar economic phases, we see this period as particularly opportune for investments in this category. Our portfolios are strategically positioned to capitalize on this trend, reflecting our confidence in the robust fundamentals and growth potential of our selected companies.

Navigating Market Complexities in North America

In North America, monetary policy decisions may either stabilize or slightly depress the market. The impending U.S. elections add a layer of complexity, potentially influencing market volatility. However, historical trends suggest a favourable outcome for equities during election years.

Asia’s Diverse Investment Landscape

In Asia, particularly in China, the economic environment is challenging yet ripe with opportunities for discerning investors. Recent government stimulus initiatives aim to bolster the economy, providing a conducive backdrop for strategic investments in undervalued yet fundamentally strong companies.

Quick Takeaways

• Anticipated rate cuts suggest a favourable environment for small-cap stocks, with significant potential for outperformance.
• The global economic outlook remains mixed, with foundational stability offering some protection against potential downturns.
• North American markets could experience volatility influenced by economic policies and election outcomes.
• In Asia, especially in China, strategic investments in response to government stimulus and market adjustments offer substantial opportunities for growth.
• Our small cap strategies are well-prepared to leverage these conditions, focusing on companies with solid fundamentals and strategic market positions.