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Despite recent global financial shocks—including an extreme tariff policy rollout, growing budget deficits, and geopolitical instability in the Middle East—markets have shown surprising resilience through the first half of 2025. The S&P 500 posted a total return of 6.2%, which when annualized is a healthy 12.4%, aligning with expectations for a normalized market in a stable economic expansion.
Canada’s market performance was even stronger, with the TSX returning 10% in H1 2025. This came despite domestic economic weakness, as investors appeared to value long-term earnings growth potential, particularly given the composition of the Canadian index.
The standout performance came from equity markets outside North America.The MSCI EAFE Index posted a remarkable 19.9% return, outperforming the S&P 500 by 13.7%—its strongest half-year outperformance in 50 years.
However, these positive numbers mask significant volatility. Between February 19th and April 9th, markets flirted with bear territory due to a botched rollout of the most aggressive tariff plan in over a century. Although this appeared to be a negotiating tactic by President Trump, the uncertainty caused market turmoil. Eventually, the policy was rolled back, triggering a strong rebound.
The broader economic backdrop suggests a late-cycle expansion, but not a fragile one. Heavily deficit-financed stimulus, potentially falling interest rates, strong household and corporate balance sheets, and continued AI infrastructure investment point toward a potentially extended cycle.
Looking forward, while a summer consolidation is possible due to softer economic data, the absence of recession, improving U.S. trade dynamics, and a more accommodative Federal Reserve could help maintain positive market momentum into the second half of 2025.
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Bottom line: No matter what the headlines read or how the markets move in the short term, please know that my focus remains firmly on you and your long-term financial success. I'm here to help you stay grounded, make informed decisions, and adjust when needed—always with your best interests at heart. Together, we will navigate the ups and downs and continue building toward the future you've envisioned. So, get outside and enjoy this summer weather as you can be confident that you have an investment professional in your corner who is committed to your success every step along the way.
Thanks for reading and enjoy the sunshine. AP
