Canada's primary stock benchmark, the S&P/TSX Composite index, concluded Tuesday's trading session marginally lower, pressured by a sell-off in technology shares. However, the index remains firmly on course to register its most impressive annual gain in over a decade and a half.
A Muted Close on Penultimate Trading Day
On December 30, the final trading day before the year's end, the Toronto-based S&P/TSX Composite index closed down 30.33 points, or 0.10%, at 31,866.26. This marked the index's third consecutive daily decline, a trend attributed to a pause in the recent rally of precious metals. The technology sub-index was a notable laggard, mirroring weakness on Wall Street and falling by 1.4%.
Strong Annual Performance Despite Recent Softness
Despite the recent dip, the broader picture for 2024 is overwhelmingly positive. The benchmark index is on track to end the year approximately 29% higher, which would represent its best yearly showing since the post-financial crisis rebound of 2009. This stellar performance has been primarily fueled by heavyweight sectors like banking and mining.
In contrast to tech, other sectors found strength. Mining stocks emerged as the top gainers on the TSX, with the gold sub-index advancing 1%. The broader materials sector followed closely, rising 0.7%. Energy stocks also joined the upward move, climbing 1.4%. This shift was driven by renewed safe-haven demand for gold and silver amid persistent geopolitical risks, following a brief period of profit-taking.
Market Sentiment and Macroeconomic Context
Market observers noted that the typical "Santa Claus rally"—a period of gains in the last five trading days of the year and the first two of January—has been subdued this season. Michael Dehal, senior portfolio manager at Dehal Investment Partners at Raymond James, pointed to year-end portfolio rebalancing as a factor influencing trading activity in the final sessions.
On the macroeconomic front, minutes from the U.S. Federal Reserve's December meeting revealed that officials agreed to cut interest rates only after a deeply nuanced debate about the risks confronting the U.S. economy. This cautious stance from the central bank continues to be a key backdrop for global markets, including Canada's.
While Wall Street indexes closed little changed in choppy trading, also partially hurt by tech and financial stocks, the annual story for the TSX is one of significant recovery and strength, setting a bullish tone as investors look toward the new year.
