Igor Kutyaev
By Garey J. Aitken, CFA, & Michael Richmond, CFA
Canadian Small Cap Strategy
Market Overview
Small cap Canadian equities finished 2023 on a strong note, as the S&P/TSX Small Cap Index increased 6.0% and finished the calendar year up 4.8%. It was an eventful 12 months for financial markets as wide variability in interest rates meaningfully impacted equities. Canadian and U.S. central banks continued to raise policy rates throughout the year to tame inflation. While inflation eased, it remains above policymaker targets. Benchmark 10-year interest rates in Canada and the U.S. reached 2023 highs of 4.24% and 4.99%, respectively, in October before ultimately giving way in the final two months of the year to close at 3.11% and 3.88%. Following a U.S. Federal Reserve meeting in December that highlighted easing inflation and slowing economic growth, rates priced in a more dovish consensus.
Despite a stronger end to the…
