Below is a summary of some of the relevant news items from the Capital Markets and the Economy from the past week extracted from RBC Global Insights and FactSet Research.

You can catch up on the past four weeks’ Weekly Update in the link to my Blog.

Read my latest Smart Investor newsletter on my website. The Q1 2025 edition covers Market Review for 2024, a discussion about the main themes for 2025, and some long-term multi-decade trends. In Shiuman’s Corner find out what my favourite books were from last year.

Markets

Market scorecard as of close on Friday March 21, 2025.

Country	Equity Indices	Level	1 week	YTD
Canada	S&P/TSX Composite	24,968	1.7%	1.0%
U.S.	S&P 500	5,668	0.5%	-3.6%
U.S.	NASDAQ	17,784	0.2%	-7.9%
Europe/Asia	MSCI EAFE	2,485	1.7%	9.9%

Source: FactSet

• TSX finished lower on Friday, off worst levels. Most sectors lower. Canadian equities finished 1.7% higher after two consecutive weekly losses.

• US equities ended mostly higher in Friday trading, near session highs. S&P, Nasdaq and Russell 2000 all logged weekly gains after four straight weeks of declines.

• Global markets have benefitted from the lack of trade-related noise over the past few weeks, with markets outside of the U.S. continuing to outperform year-to-date.

• Regarding tariffs, our bottom line is: The higher the tariffs and the longer they last, the greater the negative impact on GDP. When all is said and done, RBC Global Asset Management Inc. Chief Economist Eric Lascelles still thinks we’re more likely to end up with tariffs raised moderately, and some of the large tariffs that are introduced will be removed or reduced after trade deals are negotiated. Of course, getting from here to there could continue to be challenging for markets.

Economy

Canada

• Canadians are heading to the polls on April 28. The country’s main political parties pledged to support Canadians to counter the United States' trade tariffs. The federal parties have yet to release detailed plans on how they intend to manage government spending or pay for the tax cuts. The CBC poll tracker shows the Liberals and Conservatives are effectively tied in national polls.

• Canada’s headline Consumer Price Index (CPI) rose 2.6% y/y in February, accelerating from January’s 1.9% y/y increase and marking the fastest annual pace of price gains since June 2024. The inflation reading was above Bloomberg consensus expectations of 2.2% y/y as the end of the federal government’s GST/HST tax holiday added to growing underlying inflationary pressures and offset a slower increase in energy prices.

• Firmer-than-expected CPI and elevated inflation expectations amid an environment of tariffs and rising trade tensions complicate the Bank of Canada’s (BoC) decision-making process. After trimming its key policy rate by 25 bps at last week’s meeting, the central bank emphasized that “what [monetary policy] can and must do is ensure that higher prices do not lead to ongoing inflation.”

U.S.

• As expected, the Fed held rates steady for a second consecutive meeting, but policymakers who have been concerned about risks of higher inflation are now equally worried about downside risks to economic growth—a precarious position to be in with respect to setting interest rates.

• While the Fed is concerned about inflation risks, we think it will ultimately place greater weight on the labor market side of its mandate should the economy slow more than anticipated. Thus, we believe the balance of risks this year is tilted toward more rate cuts, rather than fewer.

Further Afield

• The Bank of England (BoE) kept interest rates unchanged at 4.5% while maintaining the “gradual and careful” approach to adjusting monetary policy. The central bank highlighted “substantial progress on disinflation,” but business survey indicators point to a weakening growth outlook.

• Germany’s lower house of parliament approved a landmark fiscal package for defense and infrastructure. With these sweeping fiscal reforms, we believe Germany is poised to enter a new phase, exiting a period in which fiscal constraints stifled growth and undermined competitiveness.

Feel free to contact me with any questions and/or to discuss investment ideas.

I appreciate the opportunity to serve you and look forward to continuing to help you accomplish your long-term financial goals.

 

Regards,

Shiuman