Q4 2022 in review

Canadian stocks posted a gain in the fourth quarter. As was the case for markets worldwide, Canada was well supported by hopes that central banks were set to pivot toward less restrictive policies in early 2023. All the positive return occurred in October and November, as stocks weakened in December on concerns that slowing economic growth could pressure corporate earnings in 2023. The nation’s market was helped by the strong showing for gold miners, which rebounded from the downtrend that had been in place since mid-April. After outpacing its developed-market peers over the first nine months of the year, Canada lagged somewhat in the quarter amid weak relative performance in the financial sector.

The U.S. stock market rallied in the fourth quarter, as better-than-expected inflation data spurred hope the U.S. Federal Reserve might be closer to slowing the pace of its interest rate increases. Fairly benign election results and strong Thanksgiving-related retail sales further aided investor sentiment. These tailwinds more than offset concerns over inflation data and a shift in COVID-19 policies in China late in the period. Within the Standard & Poor’s 500 index, the energy sector surged on the back of strong oil and gas prices. The economically sensitive industrials, materials, and financials sectors and more defensive health care and consumer staples sectors also notched sizable gains. Conversely, the consumer discretionary and communication services sectors were laggards, as rising interest rates made their future earnings worth less.

Global equities moved higher in the fourth quarter, reducing the extent of their losses for the full year. Continuing the trend that has been in place for most of 2022, the value style strongly outperformed growth due to persistent weakness in mega cap U.S. technology stocks. At the regional level, Europe rebounded nicely and was the quarter’s top performer.

Global bond markets advanced in the fourth quarter, adding a positive note to a historically severe downturn in 2022. Central banks continued to raise interest rates in the fourth quarter, including two rate hikes each by the U.S. Federal Reserve, European Central Bank, Bank of England, and Bank of Canada. In this environment, bond yields were mixed but mostly higher during the quarter, with shorter-term bond yields rising the most in response to the central bank rate hikes. Despite the higher yields, however, bonds posted positive returns for the quarter, led by sectors that benefited from the return of investors’ appetite for risk. In particular, high-yield and investment-grade corporate bonds posted the best returns while government securities underperformed. In U.S. dollar terms, bond markets in Europe outperformed, while North American markets lagged.

Market index*


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S&P 500 Composite Total Return (CAN$)












MSCI Emerging Markets Free (CAN$)






FTSE TMX Canada Bond Universe Total Return






Source: Bonds from FTSE Russell and equities from TD Securities, as of December 31, 2022 *Performance histories are not indicative of future performance. An index cannot be purchased directly by investors. 

A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect portfolio performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other pre-existing political, social and economic risks. Any such impact could adversely affect the portfolio’s performance, resulting in losses to your investment.

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