A look back at 2024 in the lens of S&P/TSX sector indices
2024 was, by most accounts, a fantastic year in the Canadian financial markets, as seen by S&P/TSX Composite Indexʼs* total return of 21.7%. The total return is comparable to the S&P 500Ⓡ Index that performed slightly better with a 23.3% return¹. In this article, we will reflect on the Canadian equity market this past year through the lens of the 11 sector indices within the S&P/TSX Composite Index.
EXHIBIT 1: S&P/TSX Sectors - Total Return 2024
Based on Exhibit 1, we can clearly see that some sectors have risen to the top. Overall, all sectors returned positively, with the exception of Communication Services, which experienced a sizable loss of 21%. This downturn wasnʼt attributable to a single constituent but rather an industry-wide decline.1 On the flipside, Information Technology and Financials were the top-performing sectors within the Canadian equity markets, both achieving greater than 30% returns in 2024. The eight other sectors all ended on a positive note with an average return of 14.2%. On a macro level, the Bank of Canadaʼs effort in lowering the overnight lending rate from a high of 5% to 3.25% over the second half of 2024 has likely contributed to the positive results of many of the S&P/TSX sectors.
Upon taking a glimpse of year-to-date (YTD) 2025 (mid-February), Information Technology and Materials continued their upward momentum, whereas Health Care and Consumer Staples reversed course. Notably, the Canadian Health Care sector erased all of its gains from 2024 in just two months of 2025. Out of the four constituents in the Canadian Health Care sector, half of them have suffered double-digit losses so far in 2025.¹
¹Source: Bloomberg Finance L.P.
EXHIBIT 2: S&P/TSX Composite Index Total Return Contribution by Sectors
Exhibit 2 observes the return contribution of each sector to the S&P/TSX Composite Indexʼs total return in 2024. As expected, the return contribution was heavily skewed, with the top 3 sectors (Financials, Energy, and Information Technology) accounting for 78% of the total return. Conversely, the bottom 3 sectors (Real Estate, Health Care, and Communication Services) contributed negatively, primarily due to the outsized decline in Communication Services. Despite strong double-digit returns in Materials, Consumer Staples, Utilities, and Consumer Discretionary, the aggregate contribution to total return was less than 20%, as the sector weights in aggregate were not significant.
EXHIBIT 3: 2024 Sector Weights compared to S&P500 (Year end 2024)
Exhibit 3 examines the 11 sector weights across the S&P/TSX Composite Index and S&P 500 Index. The notable difference between the two indices is nothing new, but emphasizes the Canadian equity marketʼs heavy reliance on natural resources sectors and Financials relative to the U.S. From a sectoral perspective, this serves as a good reminder that the two neighbouring markets in North America are starkly different and can act as diversifiers to one another.
All in all, 2024 was a stellar year in the Canadian equity market, and it remains to be seen how 2025 will play out - whether the positive momentum will continue or the bull run will lose its steam.
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