Global Index Performance

 

 

Fixed Income*

Fixed income markets held steady in April, with Canadian 10-year bond yields ending the month at approximately 3.07%. Concerns surrounding inflation and escalating global trade tensions has caused growing investor caution.

In its April deliberations, the BoC’s governing council highlighted the unpredictable nature of U.S. tariff actions and their potential impact on the Canadian economy. Rather than issue a standard forecast, policymakers outlined two broad economic scenarios: one in which tariffs are short-lived and inflation remains stable, and another where long-lasting tariffs push inflation above 3% and trigger a recession. The Bank of Canada held its policy rate steady at 2.75% and introduced a framework to assess how tariffs could dampen demand for Canadian exports and affect business investments, employment rates, and consumer spending.

For bond investors, the uncertainty in this environment reinforces the value of diversification. Notably, the spread offered on corporate bonds versus government debt has narrowed to its tightest levels since just before the 2008–2009 global financial crisis, indicating a strong appetite for corporate credit, which may be a signal of confidence in the overall economy.

Equities*

Equity markets closed out April with mixed performance, as geopolitical uncertainty and U.S. trade policy overshadowed an otherwise solid earnings season. For Canadian investors, this translated into heightened volatility across both domestic and global equity exposures, with sharp intraday swings and investor sentiment driven more by policy headlines than company fundamentals.

While still experiencing a modest decline, performance of the S&P/TSX Composite Index improved in April relative to March returns. This was supported by strength in energy and materials amid a weaker Canadian dollar and rising commodity prices. However, gains were tempered by broad global risk aversion and a pullback in financials. U.S. equities experienced continued volatility, with the S&P 500 Index finishing the month roughly flat as mid-month trade tensions flared and then partially subsided toward the end of April.

Stock-pickers on both sides of the border found themselves frustrated as tariff announcements and rollbacks from the U.S. administration repeatedly disrupted pricing mechanisms and investor expectations.

April underscored investors’ increasing demand for stability and clear direction from U.S. leadership as unpredictable tariff policy continued to cloud the broader economic outlook. The resulting uncertainty has heightened concerns about a potential global slowdown, with early signs of stress emerging in trade-dependent industries and emerging markets.

For Canadian investors, market volatility will likely persist. Emphasizing diversification and high-quality holdings remains prudent, especially in a policy-driven environment. Sectors such as energy and industrials could benefit from fiscal measures and strong commodity prices, while technology and consumer discretionary may remain vulnerable to shifting sentiment and ongoing supply chain disruptions.

Outlook and Market Trends

The Canadian federal election results from April 28^th offered political clarity, which brings both opportunities and new questions for investors. While this reduces some uncertainty, questions remain around key policies on taxation, housing, and fiscal discipline—each with potential sector-level implications, particularly for real estate, financials, and energy.

Globally, diverging central bank paths are shaping currency and interest-rate expectations. The U.S. Federal Reserve appears closer to easing policy, while the Bank of Canada remains cautious amid uncertainty surrounding inflation. This divergence could keep the Canadian dollar range-bound and slightly weaker, supporting exporters but increasing import costs.

Looking ahead, several key investment themes stand out for the coming months:

• Rate-sensitive sectors like utilities, REITs, and infrastructure could benefit if rate cut expectations continue to build.
• Thematic exposure to energy and critical minerals, such as battery metals, nuclear, and carbon capture remains a strategic forward-looking allocation.
• Technology and automation continue to offer long-term growth as markets focuses on practical AI adoption.
• Fixed income is offering compelling opportunities, with bonds providing diversification, income, and downside protection.
• Defensive and income-generating assets such as infrastructure and dividend-paying equities offer resilience in a slower growth environment.

In this evolving landscape, we maintain a focus on diversification, quality, and selective risk-taking. We have positioned portfolios to balance diversification and growth opportunities, while remaining flexible to adjust as economic and policy conditions evolve.

 

*Data sourced from FactSet as of May 2, 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