Q: Hello 5I Team
The market is at all time highs today with current interest rates .When the interest rates start to get cut in Canada and the US what does history tells us , should the market continue to go higher or decline? Does 5I share the same view this time around?
Thank you for your valuable insight.
The market is at all time highs today with current interest rates .When the interest rates start to get cut in Canada and the US what does history tells us , should the market continue to go higher or decline? Does 5I share the same view this time around?
Thank you for your valuable insight.
5i Research Answer:
Markets will continue to move on earnings, primarily, as rate cuts are widely expected and may be starting to get priced in. Historically, much still depends. Rate cuts are typically good for equity valuations, up to a point. If rates are being cut to fight off a recession, then lower corporate earnings tend to be more of the the driving factor and stock prices can decline. In the US, a soft-landing looks likely now, with rates shifting lower but profits shifting higher. This can be very good for stocks. In Canada, it is less assured, as our economy is not in nearly as good as shape as the US right now.