Spring is in full swing, and so are Canada’s markets – swinging, that is. This week served up a mix of cool inflation data and hot stock prices, with a side of trade drama to keep things spicy. From tech stocks riding a tariff rollercoaster to big banks prepping for stormy weather, let’s unpack how macroeconomic twists are influencing the tech, financial, and real estate sectors. (Witty comments included at no extra charge.)
Inflation Cools Down – But the Plot Thickens 📉🔥
It was the carbon tax break to the rescue! Canada’s annual inflation plunged to 1.7% in April from 2.3% in March , largely thanks to cheaper gas after the federal carbon tax was lifted. Consumers got a nice break at the pump (gas prices dove 18% year-over-year) , and for a moment it seemed like “Mission Accomplished” on the cost-of-living front.
But before we pop the champagne (or rather, the maple syrup), note the twist: core inflation is actually on the rise. Strip out energy, and prices climbed at a 2.9% clip – faster than the month before. In fact, the Bank of Canada’s preferred core measures are now running above 3% . In other words, underneath that headline cooldown is some simmering heat. It’s as if inflation put on a winter coat, only to reveal a summer tank top underneath.
What’s a central bank to do? Just a few weeks ago, traders were betting about a 64% chance of a June rate cut – now those odds have tanked to under 35% after seeing April’s data. The Bank of Canada, which had already hit pause at a 2.75% overnight rate, suddenly looks less likely to slice borrowing costs further. Governor Macklem & Co. are essentially stuck in a Game of Thrones scene: “pause or not to pause”, with dragons of inflation on one side and white walkers of a slowing economy on the other. They’ve made clear they can’t fight a recession and rising prices at the same time – tricky, eh?
What it means for investors: If you’re waiting for lower interest on your variable mortgage or a boost to those growth stocks that thrive on cheap money, you might need to hang tight. No rate cut relief (for now) means borrowing costs stay put, and high-growth tech names won’t get that easy-money sugar high just yet. On the bright side, stable rates could keep the loonie and bond yields steadier, so your Canadian dollar won’t be taking a wild ride in your wallet. It’s a classic wait-and-see, with June 4 circled on every Bay Street economist’s calendar.
TSX Scores a Record High on Mining Mojo 🚀
If you blinked, you missed it – the S&P/TSX Composite just notched a record high, closing above the 26,000 mark for the first time ever . Cue the fireworks and Gordon Lightfoot songs! The index has been on a tear, racking up 10 straight winning sessions – its longest hot streak since way back in 2021. It’s like the Toronto Raptors of stock indexes, dunking on bears left and right.
So, who do we thank for this rally? Look no further than the materials sector, where gold miners and metal companies have been glittering. The materials group climbed 3.5% on the week as gold prices shot up – evidently, investors still love a shiny hedge when uncertainty lurks. Consumer staples also chipped in a solid +1.5% (apparently, even in a boom, we can’t resist our Tim Hortons coffee and ketchup chips).
Interestingly, the usually high-flying tech sector sat this one out, ending about 1.4% lower over the streak’s final session . Don’t blame Shopify – it’s just that after soaring earlier (more on that in a minute), tech took a breather while the more boring-but-stable sectors led the charge.
Why the optimism? Two words: trade peace (maybe). Investors largely shrugged off hotter core inflation readings, betting that global trade tensions were easing instead . With the U.S. and China striking a tentative truce in their trade tiff and a big G7 meeting in Canada promising group hugs (or at least fewer food fights) , the mood on Bay Street turned risk-on. In short, the market smells potential good news and is running with it.
Of course, not everything is sunshine and maple lollipops. The fact that gold – the classic fear gauge – is rallying while stocks hit records is an odd combo. It’s a bit like dancing on a volcano: fun, but you wonder if something’s bubbling underfoot. Retail investors should enjoy the portfolio gains (your index ETFs probably had a great week), but stay mindful. Record highs can make markets a tad frothy, and this rally is built in part on the expectation that worst-case trade war outcomes will be avoided. If those expectations get dashed… well, you know how fast the ride down can be.
Bottom line: A record-setting TSX is a vote of confidence in Canada Inc., powered by miners, grocers, and a dollop of hope. Just keep one eye on those global headlines while you celebrate – this cake could lose its icing if sentiment sours.
Tech Stocks’ Wild Ride – Tariffs to the Rescue? 🤖🎢
Someone get Canadian tech stocks a neck brace, because whiplash has been the theme of the season. The drama peaked when President Trump decided to play hot-and-cold with tariffs. One week in early April, he threatened to slap universal tariffs on pretty much everyone (Canada very much included) – markets panicked and nearly $5 trillion was wiped from global equities in the rout . Shopify (NYSE: SHOP) and friends weren’t spared; Canadian tech got dragged down hard in that sell-off .
Then came the plot twist: Trump, perhaps realizing that was a bit too spicy, paused the blanket tariffs and carved out exemptions. The result? A tech rally for the ages. Shopify’s stock exploded by 18.6% in a single day on the news (yes, you read that right – 18.6% in one day, not a typo). Lightspeed (TSX: LSPD) wasn’t far behind with a ~14% jump . Even old guard names like Constellation Software and BlackBerry got a solid boost, climbing high-single to double-digit percentages alongside the e-commerce darlings . This wasn’t just a dead-cat bounce; it was more like a caffeinated cougar leap.
The whiplash part? These gains reversed steep losses from just days prior. It’s like the market shouted “Tariffs are off (for now)! Everybody back in the pool!” after screaming “Get out of the water!” the week before. And it’s not just trade news yanking the tech sector around – AI hype has been another catalyst. We’ve seen scenarios where AI-linked stocks soared and sank within days, depending on the latest craze or profit-taking pullback . In late January, for example, an AI scare knocked tech down one day only for a feverish rebound the next . Life in tech-land is anything but boring.
What’s the takeaway for investors? Volatility is the price of admission for high-growth, high-octane sectors like technology. Retail investors should keep their cool through the twists. If you believe in the long-term story of a company like Shopify, a tariff tantrum (or an AI bubble) shouldn’t prompt you to ditch your game plan overnight. In fact, these rollercoaster moments can be opportunities – just ask anyone who bought the dip during the tariff scare and enjoyed the ride up. That said, it pays to diversify. The tech sector’s fate in 2025 is tied not just to earnings and innovation, but to the whims of global politics and central bank policy. In short: enjoy the ride, but maybe pack gravol for the motion sickness.
Banks Bulk Up Safety Nets 🏦💪
Canada’s big banks are typically the stoic blue-chip anchors of any portfolio – steady dividend payers that rarely break a sweat. But even these sturdy ships adjust their sails when a storm is on the horizon. This week, as the banks prepared to report earnings, we learned they’ve been bracing for impact from the trade war squalls. How so? By stockpiling loan loss reserves like canned goods before a hurricane. Four of the Big Six banks each set aside **over C$1 billion in Q2 for potential loan defaults . That’s a chunky safety cushion, reflecting worries that if the economy hits a rough patch (say, a tariff-induced slowdown), more borrowers could struggle to pay back loans.
This precaution comes at a cost, of course – those billions stashed away are billions not showing up as profits. Sure enough, analysts expect a profit dip at some banks. In fact, BMO (TSX: BMO) and TD (TSX: TD) are forecast to see net income decline, whereas the other big banks might still squeak out about 7–8% earnings growth on average . It’s a tale of two realities: the core banking business (taking deposits, making loans) has benefitted from high interest rates boosting margins, but those same high rates are pinching borrowers – and banks fear a few more loans could go bad . Add the trade uncertainty and slower deal-making (investment banking has been in a bit of a funk ), and you get a more cautious outlook from our normally confident bank CEOs.
From a macro perspective, this is actually the banking system doing what it’s supposed to: preparing, not panicking. Canadian banks remain well-capitalized and resilient (the Bank of Canada even noted they started 2025 with elevated capital and liquidity buffers ). So no, this isn’t 2008 all over again – far from it. It’s more like putting on a raincoat just in case it drizzles.
For retail investors: bank stocks might feel a bit dull in the short term. Don’t be surprised if share prices of the big lenders move sideways or slightly down as these loan loss provisions hit earnings. But remember why you hold them – those reliable dividends and long-term stability. In fact, if markets overreact and send bank stocks lower, income investors may find sweeter dividend yields on offer. Just keep an eye on the bigger picture: if the trade war resolves favorably and the economy chugs along, banks could quickly pivot from playing defense to offense again (maybe even releasing some of those provisions). For now, your friendly Canadian bank is basically saying “Better safe than sorry.”
Real Estate Holds Steady (for Now) 🏘️📊
After the rollercoaster of the last few years, the Canadian housing market in spring 2025 feels… oddly calm. Think of it as the intermission in a very intense play. National home sales in April were flat compared to March – essentially a pause in the slow bleed we saw earlier in the year. They’re still about 9–10% lower than April last year, but at least things aren’t free-falling. Prices are in a gentle drift downward too: the MLS Home Price Index slipped 1.2% on the month, leaving average prices ~3.9% below last year’s levels . Not great if you’re a seller, but it’s hardly the crash some doomsayers predicted.
One reason you’re not seeing a bigger correction is supply and demand balancing out. There were about 183,000 homes listed for sale nationwide at April’s end, up 14% from a year ago . That sounds like a lot more “For Sale” signs, but it’s still a hair below the long-term average. In plain English: inventory is finally back to normal in places like Toronto and Vancouver (after years of scarcity), and buyers now have options. But outside the big metros, supply remains tight. So it’s a very local story – some markets are lukewarm, others are cooler than a Saskatchewan spring.
What’s really fascinating is what’s holding buyers back now. It used to be sky-high interest rates and jaw-dropping prices. Rates have since come down a bit (the Bank of Canada’s earlier cuts eased the pressure, and mortgage rates in mid-2025 are off their peaks), and prices have softened. You’d think that would tempt buyers out of hibernation. But nope – now it’s economic anxiety cast by the trade war that’s giving people pause . As CREA’s Senior Economist Shaun Cathcart put it, 2025’s housing market feels like the quiet of 2022 all over again, except “tariff uncertainty [is] taking the place of high interest rates in keeping buyers on the sidelines” . Even homebuyers are watching CNN and checking Twitter for tariff updates these days, it seems.
The big looming question: What happens when a huge chunk of Canadians hit their mortgage renewal dates this year and next? Roughly 60% of all mortgages will need renewing in 2025–26 , and many of those folks previously locked in ultra-low rates. Even with recent rate relief, about 60% of renewing mortgages will see higher payments at renewal . That’s a potential squeeze on consumer spending and could force some tough decisions. The housing agency hasn’t seen a wave of forced selling (people listing homes because they can’t afford the payments) in decades – but they’re wary that a recession could trigger one. It’s the elephant in the room for housing: we’re okay for now, but if job losses tick up or rates don’t fall as much as hoped, the For Sale floodgates could open.
What should the retail investor do? If you have exposure to real estate – be it through owning a home, rental property, or REITs in your TFSA – keep a close watch on interest rate trends. Real estate investment trusts (especially residential ones) will fare better if borrowing costs ease and occupancy stays high. So far, so good: lower rates have started to ever-so-gently revive buyer interest, and landlords aren’t facing mass vacancies (rents are still robust in most cities). For potential homebuyers, this calmer market could be an opportunity to buy without the 2021-style bidding wars – just don’t expect prices to collapse in your favor (sellers aren’t desperate en masse, at least not yet). And if you’re one of those mortgage renewers, consider shopping around for rates and maybe locking in a bit of certainty, because as we’ve learned, the only thing predictable about the economy right now is its penchant for surprises.
Conclusion: This week in Canadian markets had a little bit of everything – cooling inflation that tasted sweet but with a spicy aftertaste, stocks hitting record highs even as gold glittered with caution, tech companies partying one moment and puking the next (figuratively speaking), banks treading carefully, and a housing sector in a strange state of equilibrium. It’s a testament to how interconnected everything is: what the Bank of Canada does, what presidents tweet, and what consumers feel in their guts all end up reflected in our portfolios.
For retail investors, the name of the game is diversification and perspective. The tech hype machine can roar and stall, but a balanced portfolio ensures you’re not on one single rollercoaster. High inflation can nibble your purchasing power, but maybe your bank stocks and commodities can provide a hedge. Trade wars can loom, but they do end eventually (they better, or we’ll run out of Tums for the heartburn).
As we head into next week, keep one eye on the Bank of Canada’s signals (any hint of softening or hardening stance) and the other on those global headlines (tariff tea-leaves reading, anyone?). And maybe a third eye (get one implanted? 🤖) on earnings and economic data. It sounds like a lot – but don’t worry, we’ll digest it all for you in style.
Thank you for reading, and may your portfolios be ever in your favor!
