2018 OUTLOOK: "Financials and energy are two sectors we think will provide interesting investment opportunities in 2018."
Over the past year, the Canadian equity market has reflected both the state of divergent economic growth rates among the regions of the world and select "made in Canada" developments. For a number of reasons, we believe 2018 will see a similar pattern.
In 2017, improved economic growth was the catalyst for interest rate increases in both the United States and Canada, but we may see the two countries diverge in 2018.
While the US economy is forecast to chug along in the mature stage of its economic cycle, consensus estimates are projecting slower Canadian growth. No one yet knows how a slowdown would affect the pace of monetary tightening by the Bank of Canada (BOC), although like the United States, we expect Canada to remain in a rising rate environment.