Investment update

Weekly insight into the marketplace.

April 14 to 18, 2025

A semblance of calm returned to markets

In a holiday-shortened week, investors were able to catch their breath as markets returned to something that resembled normal after weeks of dramatic swings and volatility. On Monday, Canada’s TSX saw all 10 of its major sectors rise and the overall index notched a 1.2% gain, as it continues to claw back some of the losses that had the benchmark down over 4% year-to-date. The major U.S. benchmarks also closed higher as the CBOE Volatility Index, known as Wall Street’s “fear gauge,” eased to its lowest closing level since April 3. Tech stocks, cooling inflation and some potential relief on the 25% U.S. auto tariffs helped the TSX reach a 12-day high on Tuesday, rising 0.8%. In the U.S., despite better-than-expected quarterly earnings results from Bank of America and Citigroup, the Dow, S&P 500 and the Nasdaq all dipped moderately. The losses on Wall Street were steeper on Wednesday following stark remarks from U.S. Federal Reserve Chair Jerome Powell at the Economic Club of Chicago. Powell called Trump’s tariff plans “fundamental changes,” and said the Fed will "wait for greater clarity" before they make any clear decisions on monetary policy and interest rates. In Canada, the TSX extended its win streak to five days with a 0.2% gain on Wednesday and 0.4% on Thursday. Up 2.6% for the week, it was the Canadian benchmarks biggest weekly gain since September. Thursday’s results on Wall Street were mixed with the S&P 500 up 0.13%, while the Nasdaq and the Dow declined 0.13% and 1.33%, respectively. For the week the S&P 500 slipped 1.5%, the Nasdaq fell 2.6% and the Dow lost 2.7%.

The Bank of Canada paused the rate-cut cycle

On Wednesday, Bank of Canada officials held the policy interest rate steady at 2.75% – the first pause following seven consecutive interest-rate cuts. Explaining their rationale, Governor Tiff Macklem first pointed to the Canadian economy’s strong end to 2024, an inflation rate that’s remained close to their 2% target, and how the previous seven rate cuts have boosted household spending and economic growth. Since then, though, the rapid-fire shift in U.S. trade policy has created mass uncertainty for financial markets and the global economy. "A lot has happened since our March decision five weeks ago," Macklem said in his opening statement. "But the future is no clearer. We still do not know what tariffs will be imposed, whether they’ll be reduced or escalated, or how long all of this will last." Macklem added: “At this meeting, we decided to hold our policy rate unchanged as we gain more information about both the path forward for U.S. tariffs and their impacts. Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What we can and must do is ensure that Canadians continue to have confidence in price stability.” Looking ahead, Macklem unsurprisingly said the bank will proceed carefully, with particular attention to the risks.

Canadian inflation cooled in March

Statistics Canada’s March consumer price index (CPI) report showed prices increased at a 2.3% annual pace last month, down from 2.6% in February. Economists were forecasting 2.7%. The slower-than-expected rate was led by lower prices for travel tours, gasoline and cellular services. Annually, travel tour costs declined 4.7% in March after surging 18% in February. On a monthly basis, travel prices fell 8% after a 23.2% increase the month prior. Airfares were also down 12% on a year-over-year basis. Crude oil prices that declined amid global demand and tariff-related concerns helped drive the cost of gasoline down 1.6% year over year in March, a contrast to February’s 5.1% increase. Cellular services saw an 8.8% year-over-year drop in March, which follows a 3.7% decrease in February. Consumers have been benefiting from industry-wide cellular deals and promotions. Restaurant prices in March, the first full month after the federal sales tax break, stood out for their negative effect on CPI, rising 3.2% annually after falling 1.4% in February.