Investment update

Weekly insight into the marketplace.

March 24 to 28, 2025

Markets fell from early-week highs

All four of the major North American stock indexes closed comfortably higher on Monday after reports indicated that the Trump administration’s latest round of tariffs, scheduled for April 2, might not be as sweeping as originally expected. Canada’s TSX rose 1.3% to a three-week high, the Dow advanced 1.4%, the S&P 500 was up 1.8% and the tech-heavy Nasdaq surged 2.3%. Mega-cap technology stocks drove much of Monday’s activity with Tesla shares rising 12%, while Meta Platforms and Nvidia each added 3%. The rebound continued Tuesday, although on a smaller scale, with the TSX up 0.1%, the S&P 500 rising 0.2% and the Nasdaq increasing by 0.5%. The Dow, which also inched up, closed in positive territory for the first time on a year-to-date basis. Investors also brushed aside Tuesday’s weaker-than-expected U.S. consumer confidence data. On Wednesday, the White House confirmed that U.S. President Donald Trump would announce tariffs on automobile imports after markets closed. The news triggered a sharp stock sell-off led by the same tech giants that had driven gains earlier in the week. Shares of major automobile companies also slumped following the news. The Dow fell 0.5%, the TSX ended the day down 0.7%, and the S&P 500 and Nasdaq declined 1.1% and 2%, respectively. The TSX was flat at Thursday’s close, and the Wall Street benchmarks slipped lower, as investors continued to digest the potential damaging economic effects of a full-blown trade war. The S&P 500 and the Dow fell 0.3%, while the Nasdaq shed more than 0.5%. On Friday, a higher-than-expected U.S. inflation report exasperated the already unstable situation. All four North American benchmarks tumbled again and closed with weekly losses.

The trade war continued to escalate

On Monday, U.S. President Trump left some room for optimism in his ever-evolving trade policy, saying he may give “a lot of countries breaks” when it comes to the tariffs scheduled to take effect April 2 – a day he referred to as ”Liberation Day.” The comment followed reports by Bloomberg and the Wall Street Journal that those tariffs – seen as retribution for retaliatory tariffs from other countries – may be narrower and more targeted than previously anticipated. That perceived flexibility provided a brief reprieve for markets on Monday and Tuesday, but the U.S. President’s unpredictability drove uncertainty in the latter half of the week. On Wednesday, Trump announced a new tariff on all imported vehicles: “What we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” he said at the White House. The new auto tariff is effective April 3 and expands on the April 2 tariffs. Later in the day, Trump added that he would add more tariffs on the European Union and Canada if they worked together “to do economic harm” to the U.S. Speaking from Parliament Hill on Thursday, Prime Minister Mark Carney said, “The old relationship we had with the U.S. based on deepening integration of our economies and tight security and military co-operation is over.” Carney didn't provide specifics but added, ”Our response to these latest tariffs is to fight, to protect and to build.”

Canadian GDP expanded and U.S. inflation remained high

Statistics Canada’s Gross Domestic Product (GDP) report for January showed economic growth of 0.4% on a monthly basis, outpacing the upwardly revised 0.3% in December. Economic activity in Canada has grown at a steady 2% annualized rate over the past two quarters, driven by healthy consumer spending following seven consecutive Bank of Canada interest-rate cuts. Thirteen out of 20 sectors expanded in January, led by the oil and gas mining industries. A flash estimate for February showed growth was likely unchanged. In the U.S., the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, was flat on both a monthly (0.3%) and annual (2.5%) basis in February. Core PCE, which removes the more volatile food and energy components, showed a 0.4% monthly increase and a 2.8% annual rise. The Fed’s target for PCE is 2%.