Investment update

Weekly insight into the marketplace.

July 28 to August 1, 2025

Markets churned with a busy news cycle

The week got off to a quick start following news over the weekend that the U.S. and European Union had agreed on a trade deal framework that levied 15% tariffs on most EU goods. The Dow declined 0.14% and TSX shed 0.32% on Monday, while the S&P 500 and the Nasdaq both inched to record highs with gains of 0.02%, and 0.33%, respectively. It was the first of several trade developments through the week that included the U.S. imposing 35% tariffs on Canadian goods, 50% for Brazil, 25% on India, 15% on South Korea, 50% on imported copper products, while extending Mexico’s current trade deal for 90 days. Canada managed to sidestep the copper tariff, though, which is aimed more specifically at products produced in China. The TSX rebounded to a record high on Tuesday, led by gains in the tech sector as shares of Toronto-based company Celestica surged 16.9% after a better-than-expected quarterly earnings report. The S&P 500 declined for the first time after six consecutive record highs; the Dow also fell 0.5% and the Nasdaq finished 0.4% lower. On Wednesday the Bank of Canada and the U.S. Federal Reserve (the Fed) held their respective policy rates steady. In the aftermath, the TSX posted its biggest weekly decline in 10 weeks, the Dow declined 0.38%, and the S&P 500 dipped 0.12%. The Nasdaq remained positive, gaining 0.15%. All four of the major stock indexes closed lower on Thursday amid a flurry of activity that included the release of U.S. personal consumption expenditures (PCE) price index data (which rose 0.3% in June), Canadian GDP figures (which contracted in June), and Microsoft and Meta Inc.’s quarterly earnings. Global markets sank further on Friday with the arrival of U.S. President Donald Trump’s August 1 tariff deadline that had implications to several other countries around the world.

Central banks held rates

On Wednesday, both the Bank of Canada and the Fed elected to hold their key rates at the current level. For the Bank of Canada, it was the third consecutive meeting dating back to January 29 that officials have held the policy rate at 2.75%. Policymakers cited three main factors in the decision: first, uncertainty about U.S. tariffs on Canada, which continues to be a moving target. Second, despite U.S. tariffs disrupting trade, Canada’s economy has showed signs resilience through the first half of the year. And finally, inflation has hovered near the bank’s 2% target in 2025, but evidence is pointing to underlying pressures that are on the rise. In his opening statement, Governor Tiff Macklem said there was “clear consensus” to hold the policy rate unchanged, but the governing council members “will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade.” In the U.S., despite very public pressure from President Trump, the Fed, led by Chair Jerome Powell, held its short-term rate in the 4.25% - 4.5% range. Looking ahead, Powell said: “We have made no decisions about September. Our obligation is to keep longer term inflation expectations well-anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem."

AI-demand propelled blockbuster earnings

Multiple industry-leading organizations reported quarterly results last week, but names like Starbucks, Visa, Air Canada and UPS were overshadowed by the AI powerhouses that continued to dominate earnings season. Meta saw its stock surge 12% Thursday morning following better-than-expected quarterly revenue of US$47.5 billion (versus the forecast US$44.83). The Facebook parent company also said it anticipates between $47.5 billion and $50.5 billion in Q3, well ahead of the previous outlook. Microsoft’s revenue jumped 18% in the fiscal fourth quarter to US$76.4 billion, outpacing the $73.84 billion Wall Street was expecting. Following the report, shares of the company climbed 7%, pushing its market capitalization over the US$4 trillion mark – only the second company alongside Nvidia to reach that milestone. In Canada, Celestica Inc., a major supplier of AI equipment to companies such as Google, Meta and Amazon, reported revenue of US$2.89 billion. The earnings beat sent Celestica shares soaring 17% higher and helped the company overtake CGI Inc. to become Canada’s third most valuable tech company. Celestica stock is up close to 80% this year alone, and the company now has a market cap of $32.8 billion. Apple and Amazon also reported quarterly results last week, but investors were underwhelmed in comparison to the other Big Tech conglomerates.