📈 2025 Financial Markets: Year in Review

🇺🇸 Equities — Resilience Amid Volatility

• U.S. and global equity markets finished 2025 with solid gains overall. Major indices like the S&P 500 and Nasdaq posted meaningful positive returns, led by strong performance in large-cap tech and AI-related stocks.

• AI leaders such as Nvidia dominated market headlines, with its valuation at times eclipsing traditional giants, cementing tech’s disproportionate influence on market returns.

• However, valuation concerns emerged late in the year, with some commentators noting stretched price-earnings metrics that could signal future volatility.

📉 Market Shocks and Trade Policy Turbulence

• A sharp market sell-off in early April 2025 was triggered by widespread U.S. tariffs, causing dramatic swings and brief declines across major global indices. Markets rebounded after initial panic, but the episode highlighted vulnerability to policy shifts.

• Trade tensions extended beyond the U.S.–China front, with impacts on Canada, Mexico, and broader supply chains.

  
  

  🪙 Fixed Income & Bonds

  • Global bonds performed positively, with attractive yields and a generally high rate environment supporting returns as inflation gradually eased.

  • Central banks maintained elevated rates much of the year, balancing inflation containment with economic growth risks.

  
  

  💰 Commodities & Safe Havens

  • Precious metals were standout performers, with gold and silver surging as safe-haven bets amid economic uncertainty and geopolitical tensions.

  • Energy and industrial metals also saw episodic strength, driven by macro disruptions and supply concerns.

  
  

  🌍 Currencies & FX

  • The U.S. dollar remained a structural anchor, particularly in risk-off periods as market fragmentation and geopolitical uncertainty influenced global capital flows

🇨🇦 Canada’s Financial Markets in 2025

TSX Outperformed Many Peers

• Canada’s main stock index, the S&P/TSX Composite, delivered one of the world’s strongest equity returns in 2025

• Why Canada Performed Well

  • Equity markets benefited from:

    • Strong gains in materials and resource sectors (e.g., gold & base metals).

    • Resilience amid trade policy uncertainties with the U.S., which boosted demand for Canadian assets seen as a relative safe haven

• Bank of Canada & Interest Rates

  • The Bank of Canada (BoC) cut its policy rate multiple times, ending the year around 2.25%. This easing cycle supported credit markets and equities but kept bond yields relatively stable.

  • BoC highlighted trade disruptions and global uncertainty as challenges in balancing inflation control with growth

• Inflation and the Economy

  • Canada’s inflation stayed near the BoC’s target, with headline CPI running close to 2% for much of 2025, allowing the BoC to stay accommodative.

  • Late-year data showed slowing job growth and a rising unemployment rate, reinforcing caution in monetary policy.

  
  

📊 Macro Backdrop

• Global output remained modest, with many major economies experiencing growth below long-term trends despite resilience in certain regions. IMF estimates projected global growth around the low 3% range for 2025.

• Inflation edged lower but stayed above pre-COVID norms in many advanced economies.

• Emerging markets showed mixed results: some (like parts of Asia) remained robust, while others faced pressure from capital flow volatility and weak exports.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This blog was prepared by Alison Cannell, for the benefit of Alison Cannell, Financial Advisor with Cannell Wealth Management Inc., a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this blog comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.

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