Global Index Performance

 

 

Fixed Income*

September brought another measured step in North American monetary easing. The Bank of Canada (BoC) lowered its overnight rate by 25 basis points (bps) to 2.50% on September 17, citing cooling economic growth and inflation edging closer to its 2% target. Policymakers framed the move as a cautious step in a gradual easing cycle, while remaining alert to lingering price pressures and maintaining flexibility to adjust further should labour-market weakness or soft trade data persist. The BoC’s upcoming October 29 policy announcement and Monetary Policy Report will provide updated projections for growth and inflation as well as the BoC’s assessment of downside risks tied to exports and U.S. tariff policy. South of the border, the U.S. Federal Reserve signalled a similarly cautious approach by trimming its target rate by 25 bps to a range between 4.00% and 4.25%. Both central banks continued to balance moderating inflation against a cooling labour market. As we head into the fourth quarter, investors will be watching how Canada’s yield curve evolves, potentially steepening modestly if growth stabilizes.

Equities* 

Global equities ended the third quarter on a strong note, posting broad gains as investors balanced steady disinflation with improving policy signals. In contrast to the typical “September effect,” Canadian and U.S. equities advanced, supported by resilient earnings and easing rate expectations. The S&P/TSX Composite Index climbed to record high territory by month end, led by strength in energy, financials, and materials, as firm commodity prices underpinned investor confidence. The S&P 500 (CAD) rose 5% in September, extending year-to-date gains and setting several new records. All 11 sectors within the index finished higher, a sign of broader market participation and growing optimism that the rally is no longer driven solely by mega-cap technology names. This renewed breadth has reinforced confidence that inflation can moderate further without derailing economic growth. Outside North America, developed markets posted modest gains, while emerging markets outperformed, lifted by strength across Asia and Latin America, where policy support and improving sentiment encouraged renewed investor inflows.

Market Outlook

As we move into the final quarter of 2025, markets are adjusting to a more synchronized but measured global easing cycle. Both the Bank of Canada and the Federal Reserve (Fed) have begun cutting rates cautiously, seeking to balance slower growth against the risk of reigniting inflation. Cooling inflation, steady corporate earnings, and more supportive central-bank policies have created a generally positive environment for markets, even as trade and tariff uncertainty continues to weigh on sentiment. In Canada, near-term market direction will hinge on upcoming BoC guidance and the evolution of wage and inflation trends, while in the U.S., investors will focus on whether earnings strength can persist as demand cools and financing conditions ease. Globally, attention is shifting toward emerging markets, where renewed policy support in China and improving liquidity in Asia have helped stabilize sentiment, although capital flows remain sensitive to geopolitical and currency risks.

Against this backdrop, Fiduciary Trust Canada’s Investment Committee opted to increase exposure to Canadian equities, emphasizing materials and gold, which tend to outperform during periods of elevated geopolitical tension and inflation uncertainty. Canada’s resource-oriented market also provides a natural hedge and diversification benefit. We have also raised U.S. equity exposure in light of the Fed’s rate cuts and steady corporate fundamentals, while reducing international allocations in regions facing greater geopolitical risk and currency volatility. Overall, our portfolios remain diversified across asset classes and regions. A balanced stance for an environment characterized by gradual policy easing, uneven growth, and evolving trade dynamics.

*Data sourced from FactSet as of October 6, 2025.

 

 

 

1. As measured by the FTSE Canada Bond Universe Index
2. As measured by the S&P/TSX Composite Total Return Index
3. As measured by the S&P 500 Total Return Index in CAD
4. As measured by the MSCI EAFE Total Return Index in CAD
5. As measured by the MSCI EM Total Return Index in CAD

 

 

 

 

Important Disclosures
Past performance is not indicative of future results. Investment returns will fluctuate and are not guaranteed. Investing involves risk, including the possible loss of principal. Investors should carefully consider their investment objectives and risk tolerance before investing. Index returns shown do not reflect the deduction of management fees, transaction costs, or other expenses, and are not intended to represent the performance of any specific investment. The views and opinions expressed are those of the author and do not constitute investment advice or guarantees of future performance. Market outlooks and forecasts are subject to change without notice.