Investment update

Weekly insight into the marketplace.

August 25 to August 29, 2025

Markets hovered near record highs

The week started on a downbeat note after all four major North American stock indexes closed lower on Monday, as investors continued to debate the likelihood of a U.S. interest-rate cut in September. Adding to the speculation, U.S. President Donald Trump announced he was firing Federal Reserve Governor Lisa Cook on Monday, citing mortgage fraud allegations. The Dow dropped 0.8%, the TSX fell 0.6%, the S&P 500 lost 0.4% and the Nasdaq shed 0.2%. On Tuesday, quarterly reports from the Bank of Montreal (BMO) and Scotiabank kicked off big bank earnings season in Canada. Better-than-expected results from both lenders helped the TSX climb 0.6%, offsetting the previous sessions’ losses. The Wall Street benchmarks also bounced back, with the S&P 500 and the Nasdaq both regaining 0.4%, while the Dow Jones added 0.3%. Another set of strong bank earnings helped propel the TSX to a record close on Wednesday. RBC led the way after its shares made the biggest intraday increase since the pandemic. Meanwhile, U.S. investors anticipated an earnings report from AI powerhouse Nvidia, scheduled for release after Wednesday’s closing bell. In the lead-up, the Dow rose 0.32%, while the Nasdaq and the S&P 500 increased 0.2% (also a record high). Nvidia reported revenue of US$46.7 billion for Q2, a 56% jump from the same quarter a year earlier. The TSX eked out a 0.01% gain on Thursday to remain in record-high territory. The S&P 500 and the Dow also closed with new records, lifted by the positive market sentiment surrounding Nvidia’s results and continued AI spending. On Friday, the TSX rose another 0.5% after weaker-than-expected domestic GDP data raised the odds for a Bank of Canada rate cut later this month. The Wall Street benchmarks declined as investors digested inflation and consumer spending data.

Canada’s Big Six banks reported quarterly earnings

Canada’s top domestic lenders came into the spotlight last week. The banks’ quarterly earnings were under a greater microscope than usual, as analysts and investors looked for insight amid tariff and trade uncertainty looming over global markets. All six of the major banks reported better-than-expected results and took cautiously optimistic outlooks. For the three-month period ending July 31, BMO reported a $2.22-billion profit, up 25% from the $1.87 billion it earned in the same quarter last year. CEO Darryl White said, “The economy is proceeding as expected, neither robust nor recessionary.” Scotiabank’s third-quarter profit was $2.53 billion versus $1.91 billion a year earlier. On Wednesday Canada’s biggest bank, RBC, reported net income of $5.4 billion. That’s up 21% from 4.5-billion last year. Acknowledging the earnings amid the ongoing risks, RBC CEO Dave McKay said, “The only thing that is holding us back from sitting down and reaffirming and updating guidance is uncertainty around the tariff scenario.” National Bank’s Q3 profit was up a modest 3% to $1.07 billion on a year-over-year basis. Toronto-Dominion Bank (TD) pulled in a $3.34-billion quarterly profit, bouncing back from a quarterly loss last year that followed a US$3-billion fine from American regulators. Lastly, CIBC reported profits of $2.1 billion, up 17% from $1.8 billion in Q3 2024. Overall, though tariff uncertainty has weighed on growth, the concerns appear to be subsiding.

Canadian GDP and U.S. inflation were in focus

For the three-month period ending June 30, the Canadian economy contracted for the first time in seven quarters, according to Statistics Canada’s latest report. Gross Domestic Product (GDP) decelerated 1.6% in Q2 as tariffs weighed on Canadian exports. That’s down from a revised 2% growth in the first quarter and well above the 0.6% contraction analysts were expecting. On a monthly basis, June marked the third successive month of GDP decline. In the U.S., the Department of Commerce released the July Personal Consumption Expenditures (PCE) index data on Friday (the Fed’s preferred inflation gauge) and it showed prices increased 2.6% annually, matching June’s increase. The department also said consumer spending rose 0.5% in July, a modest increase from 0.4% in June. Consumer spending drives more than two-thirds of America’s economic activity. Friday’s data is unlikely to deter the Fed from cutting interest rates in September.