In the final trading session of 2024, Canada's main stock index futures experienced a slight uptick, driven by rising commodity prices. Despite facing challenges in December, including a 4% drop influenced by U.S. Federal Reserve policies and domestic political uncertainties, the TSX index is on track for an impressive annual gain of nearly 18%. Investors are now adjusting their expectations for future interest rate cuts and preparing for potential policy changes with Donald Trump's return to the White House. Commodity markets also showed strength, with oil prices climbing following positive data from China's manufacturing sector, and gold prices reaching new heights due to central bank purchases and geopolitical tensions.

Stock Market Performance and Investor Sentiment

The year-end trading activity saw a boost in Canada’s primary share market, with March futures on the S&P/TSX index increasing slightly. This upward trend was supported by growing optimism in commodities like oil and gold. However, the month of December was marked by volatility, leading to a significant decline in the TSX index. The U.S. Federal Reserve's hawkish stance and domestic political uncertainties contributed to this downturn. Yet, the overall performance for the year has been robust, with the TSX set to achieve its best annual growth since 2021.

Investors have had a tumultuous December, grappling with the prospect of fewer interest rate cuts next year and the potential impact of Donald Trump's return to the White House. Despite these challenges, major central banks' easing policies have spurred substantial buying of stocks. Looking ahead, investors will closely monitor employment data from both Canada and the United States to gauge future monetary policy directions. The year concluded on a note of cautious optimism, as global markets prepared for the New Year holiday.

Commodity Markets and Economic Indicators

As the year came to a close, commodity markets exhibited notable resilience. Oil prices surged following data indicating an expansion in China's manufacturing activity. This positive signal bolstered investor confidence in the energy sector. Meanwhile, gold prices climbed to impressive levels on the last trading day of a stellar year for the precious metal. Central bank purchases, geopolitical tensions, and monetary policy easing by major global banks fueled this upward trend in gold prices.

The rise in commodity prices provided a much-needed boost to the Canadian economy, which heavily relies on natural resources. Investors are particularly interested in upcoming monthly employment reports from Canada and the United States, as these figures will offer valuable insights into the economic health and potential shifts in monetary policy. The strong performance of commodities, especially gold, highlighted the ongoing importance of diversification in investment portfolios. As the global markets closed for the New Year holiday, there was a sense of anticipation for what the coming year might bring.