Global Asset Allocation Perspectives

February 2024

To help guide the positioning of Scotia Portfolio Solutions, the Multi Asset Management team of Scotia Global Asset Management meets regularly to discuss and debate the current macro environment and what it means for portfolio positioning. The following report captures the team’s current views.

Key macroeconomic themes

Global economic themes that are most likely to influence our views on portfolio asset allocation over the next 12-to-18 months.

Economic growth will continue to be challenged

Global growth will continue to be challenged in 2024 as the lagged impact of higher interest rates continues to play out. A recession can not be ruled out, but we currently do not expect it to be a deep or prolonged should it occur.

Shift in interest rate expectations

Major central banks are likely to start cutting rates in the second half of 2024. The disinflation trend will continue but economic growth will likely need to weaken further for inflation to return to more sustainable, lower levels.

Risks remain

The impact of higher interest rates will continue to create risks in financial markets in 2024. The recent rally in equities has created the opportunity to take on a more defensive position given the uncertainty in our outlook.

Let’s talk investing: Q4 2023 in review with the Multi-Asset Management Team

After up-and-down performance through the first three quarters of 2023, strong fourth quarter returns drove impressive market returns for 2023 in total. On the latest “Let’s talk investing” podcast, Greg Sweet, Scotia Securities Director, chats with Craig Maddock, Vice President & Senior Portfolio Manager, and Wesley Blight, Portfolio Manager, both from the Multi-Asset Management team. They discuss the key lessons of 4Q23, and their thoughts on what that means for the future.

Asset allocation perspectives

Equity outlook

We have a modestly negative view to equities as the global economy will likely face challenges over the next 12-to-18 months.

Global growth remains resilient, but the impact of higher rates is still playing out. Inflation has moved materially lower, but any reacceleration will be viewed negatively by the market. Rates are expected to move lower later in the year, however, low unemployment and elevated housing prices will likely constrain the ability to cut rates. Geopolitical tensions also continue to escalate.

The year end market rally looks stretched, and earnings growth will need to pick up for it to continue. 

Fixed income outlook

Towards the end of last year, central banks signalled their expectations to ease restrictive monetary policy. This helped bring bond yields down and delivered strong, almost equity-like returns for fixed income investors.

Yield levels remain elevated relative to recent years and provides a solid foundation for income and capital appreciation potential over the long-term.

The market has quickly priced in interest rate cuts for this spring or sooner. With possibility of this aggressive timeline not materializing, the direction of yields over the shorter term is less certain.



Despite long-term secular strength in the Canadian economy, we’ve shifted to a neutral view on Canadian equities. The Canadian economy is slowing as the impact of higher rates has had a greater impact on the cost of living in Canada than it has in the U.S.

The Bank of Canada is currently holding interest rates steady, as inflation remains stubborn. Coupled with Canada's negative earnings sentiment is the potential for slowing demand in oil markets.



U.S. markets continue to demonstrate relative strength with strong fundamentals. While still a concern, inflation has declined materially while growth has remained positive. The U.S. is likely finished raising interest rates and it is expected to cut rates several times this year.

Additionally, the U.S. is home to several large mega-cap technology leaders that are best positioned to benefit from ongoing technology trends like artificial intelligence. The U.S. market appears best positioned to weather a global slowdown relative to other regions.



We remain relatively underweight international markets. Macro economic indicators remain weak and underperforming those seen in the U.S.

We see limited potential for improvement with higher inflation constraining monetary policy and continued risks related to energy insecurity. In this environment revenue growth is expected to underperform. 

Emerging Markets


We are neutral emerging markets overall. Chinese economic data remains weak, and confidence continues to erode. Structural challenges around the property sector as well as regulatory and geopolitical uncertainty continue to weigh on the Chinese economy.

However, discounted valuations and pessimistic investor sentiment may provide an opportunity as China rolls out stimulus to counter the weak economy.