Investment update

Weekly insight into the marketplace.

March 10 to 14, 2025

Wall Street plunged from record highs

A week punctuated by heavy losses on Monday and Thursday saw the S&P 500 tumble into correction territory. Following the Nasdaq’s correction a week earlier, the S&P fell over 10% from its record high in February. A “Magnificent Seven” sell off led losses on Monday, with five of the seven tech giants dropping over 4% of their share value (Tesla declined over 15%). Monday also saw Canada’s TSX fall to a four-month low, ending the day down 1.5%. The Dow shed 2%, the S&P 500 slipped 2.7% and the Nasdaq took a 4% hit. An escalation in heated tariff talks on Tuesday, with Canada and the U.S. exchanging threats, sent markets lower once again. The Nasdaq declined 0.2%, the TSX lost 0.4%, the S&P 500 fell 0.8% and the Dow dropped 1.1%. The American benchmarks regained some ground on Wednesday after a report showed that U.S. inflation increased by just 2.8% annually last month. That’s down from 3% in January, and the first decrease since September 2024. The positive sentiment didn’t last, though. A tumultuous session on Thursday, driven by the European Union (the EU) and the U.S. swapping new tariff threats, saw the TSX decline 0.9%, the Dow slip 1.3%, and the S&P 500 fall 1.4% to officially enter a correction, losing US$4 trillion in value. The Nasdaq also dropped nearly 2%. A rally on tech stocks helped all four of the major North American benchmarks regain some losses on Friday, but overall, its was another losing week for markets.

The global trade war escalated

Shifting on a near-daily basis, the international trade war, instigated by the U.S. administration under President Trump, continued to shock the global marketplace. Over the weekend, China announced plans to slap nearly $4 billion in tariffs on Canadian agricultural products, including a 25% tariff on seafood. The move, in retaliation to Ottawa’s decision in October 2024 to impose a 100% tariff on Chinese EVs and 25% tariffs on Chinese steel and aluminum, adds an extra layer of complexity as Canada faces off with the U.S. On Monday, Ontario Premier Doug Ford announced a 25% tariff on electricity exports to over 1.5 million U.S. homes. Trump responded with an immediate threat to double the 25% tariff on Canadian steel and aluminum. Both measures were temporarily paused after Ford and U.S. Commerce Secretary Howard Lutnick agreed to renew trade talks. On Wednesday, the EU announced new tariffs totalling 26 billion euros on U.S goods in response to Trump imposing US$28 billion worth of tariffs on EU imports. The EU’s retaliatory tariffs took aim at Republican-held states, targeting beef and poultry from Kansas and Nebraska, and wood products from Alabama and Georgia. Illinois, considered more of a Democratic state, was also on the tariff list as it’s the top producer of U.S. soybeans. On Thursday, Trump said he would strike back with a 200% tariff on wine, champagne and other EU alcohol products if the EU didn't remove a 50% tariff on U.S. whisky.

The Bank of Canada cut its key rate by 25 basis points

On Wednesday, Canada’s central bank led by Governor Tiff Macklem, cut its overnight lending rate from 3.0% to 2.75%. It’s the Bank of Canada’s seventh consecutive policy interest-rate cut dating back to June 2024, though the circumstances are vastly different now than they were just nine months ago. Explaining why the bank elected to cut rates while the country is “facing a new crisis” in the escalating trade conflict with the U.S., Macklem highlighted that past interest-rate cuts have boosted consumer spending, job growth has remained strong, and inflation has stayed close to the bank’s 2% target. The latest cut seeks to maintain some of that momentum as Canada, along with Mexico and the EU, navigate an unprecedented trade war with President Trump. ”Looking ahead, the trade conflict with the United States can be expected to weigh on economic activity, while also increasing prices and inflation,” Macklem said in his opening remarks. Moving forward, Macklem added that the bank will ”proceed carefully with any further changes to our policy rate given the need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand.”