Investment update

Weekly insight into the marketplace.

May 26 to May 30, 2025

Markets remained near record highs

Canada’s benchmark stock index, the TSX, gained 0.81% on Monday, led by the tech and industrial sectors. U.S. stock and commodities markets were closed for the Memorial Day holiday, but futures trading got a boost after President Donald Trump announced his plan to delay tariffs on the European Union until July 9. The news lifted global sentiment and sent Wall Street surging higher when markets re-opened on Tuesday. The Dow increased 1.78%, the S&P 500 was up 2.05% (and within 3.6% of its record closing high), and the Nasdaq closed 2.47% higher. The TSX scored another record high, adding 0.75% to the previous day's record. Strong quarterly earnings from Canada's major banks helped the TSX eke out another 0.06% gain on Wednesday, while the U.S. benchmarks lost ground as investors scrutinized meeting minutes from the U.S. Federal Reserve’s May 6 to 7 sessions. The Nasdaq fell 0.51%, the S&P 500 was down 0.56%, and the Dow shed 0.58%. Markets were thrown into another quagmire with Thursday’s news that the U.S. Court of International Trade ordered President Trump to halt tariffs placed on Canada and Mexico, as well as those announced on "Liberation Day," only to be reinstated less than 24 hours later. The TSX ended lower, breaking its winning streak, while the Wall Street benchmarks all turned positive. Trading volume on Friday was low, and the major North American benchmarks all closed lower (except for the Dow). For Wall Street, May had the best monthly performance since 2023, and the TSX scored multiple record highs and remained the top performer year-to-date.

Canada’s major banks reported Q2 earnings

Following Toronto-Dominion Bank, which reported better-than-expected Q2 earnings on May 22, the remaining five of Canada’s Big Six banks released fiscal second quarter results last week. On Tuesday, the Bank of Nova Scotia (Scotiabank) reported net income of $2.03 billion, lower than analysts’ expectations, and down from $2.09 billion a year earlier. An increase in loan loss reserves - the funds banks set aside to cover loans that may default – weighed on profits (as it did for most Canadian lenders) amidst U.S. President Donald Trump’s tariff and trade demands. Scotiabank set aside $1.4 billion for credit loss provisions in Q2, up from $1 billion for the same period last year. Bank of Montreal (BMO) beat expectations last quarter, with a net income of $1.96 billion, up from $1.87 billion during the same quarter last year. BMO set aside $1.05 billion in provisions for credit losses. National Bank of Canada (National) also released its Q2 report on Wednesday, beating analysts’ estimates with net income of $896 million but down 1% from the $906 million for the same quarter one year ago. National had $545 million in loan loss provisions, up from $138 million in Q2 last year. On Thursday, Royal Bank of Canada’s (RBC) reported $4.39 billion in net income missed analysts' forecast but outpaced last year’s $3.95 billion. RBC designated $1.42 billion for credit loss provisions for Q2 versus $920 million in the same quarter last year. Also reporting on Thursday, Canadian Imperial Bank of Commerce (CIBC) topped estimates and generated higher net income this year compared to the same period in 2024 ($2.02 billion versus $1.72 billion). CIBC set aside $605 million in credit loss provisions for credit losses in Q2. Last year that number was $67 million.

Canadian GDP grew in Q1

The Canadian economy grew by 2.2% on an annualized basis in the first quarter according to Statistics Canada’s gross domestic product (GDP) report released on Friday. That’s up from the previous quarter’s 2.1% and a faster rate of growth than the 1.7% a Reuters poll of analysts forecasted. Expansion in Q1 was driven by a rise in exports, which climbed 1.6% as U.S-based companies rushed to complete orders before tariffs took effect. Investments in machinery and equipment were up 5.3%, which also helped push GDP higher in Q1. This is the last major economic indicator before the Bank of Canada’s next interest-rate decision on June 4. At the time of the Q1 GDP reports release, markets were pricing in a 75% chance that the central bank will hold its rates steady once again.