Market Commentary – Q4 2025

Here is a review of the key developments in 2025 and some thoughts on where we go from here in 2026:

• Even with Trump’s tariffs, roughly 85% of Canadian products crossed the border tariff-free, leaving Canada with an effective tariff rate of 5-6%.
• Canada’s labour market was relatively stable through 2025 whereas the US labour market has been slowing.
• Both Canada and the US central banks have cut their overnight rates with likely another cut this spring for both Canada and the US.
• 2025 was a very good year.  The TSX and S&P500 saw broad-based growth across most sectors.
• Most market watchers and analysts see 2026 as another positive year but likely not as good as 2025.
• In the summer, the USMCA will be renegotiated so hopefully that will alleviate some uncertainty.
• The US mid-term elections are in November but campaigning has already begun.  It will be interesting to see how the American electorate decides how to vote.
• Inflation seems to be finally under control with the core inflation rate very near central bank’s target of 2.00%.
• Home sales and prices across Canada, especially in major cities saw reductions in both numbers.
• Lower mortgage rates should contribute to more activity in the real estate market with the Canadian Real Estate Association (CREA) forecasting a7.7% growth in sales and a price rise of 3.2%.

All things being equal, there is cautious optimism in stock markets and bond markets in 2026.  Given the state of the world and all the uncertainty right now…don’t hold me to that!  Diversification and re-balancing portfolios will continue to be the theme for 2026 as well as focusing on dividends and distributions as a way to get paid to wait for growth.

Regards,
Cory Hill
Financial Advisor & Portfolio Manager

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