Current Investment Trends: Canada

• Interest Rates and Confidence: The Bank of Canada’s gradual rate cuts and stability at 2.75% foster a more supportive environment for investors. Lower rates are expected to further boost economic activity by reducing borrowing costs for both households and businesses.

• Resilience in Core Sectors: Industries such as energy and financial services remain growth drivers, despite tariff trade uncertainty, offsetting the weakness in the manufacturing sector.

Current Investment Trends: US

• Bullish Momentum: US stocks are hitting all-time highs in mid-2025, driven by strong corporate earnings, continued consumer spending, and robust fiscal stimulus—defying early-year tariff fears. Earnings in the S&P 500 increased by 13% in Q1, with tech and energy sectors leading the growth.

• Opportunities in Infrastructure and Innovation: The AI and digital infrastructure boom is spurring increased investment in power generation, distribution, data centers, cell towers, and green energy. Industrial and specialized CRE are expected to perform well, underpinned by structural demand for technology and energy infrastructure. 1

• Positive Policy Effects: Lower Federal Reserve rates and anticipated deregulatory moves are enhancing deal activity, IPO volume, and M&A. Strategic corporate acquisitions and capital markets are expected to remain active in this favourable environment. 2

Recent or Ongoing Bull Markets

• Sustained Equity Strength: Both the S&P 500 and the TSX have surged with 11 new highs in the past 30 days, reflecting strong earnings and investor optimism. There’s consensus that the worst of tariff risks may have passed, restoring market confidence. 3

Effects of Impending Trump Tariffs

• Potential Global Impact: While Trump’s proposed across-the-board 25% tariffs on imports would threaten both economies, current negotiations and signs of compromise are reducing immediate risks. Still, uncertainty persists, and recession risks for Canada remain heightened if strict tariffs are enforced. 4

• Short-term Effects: Canadian exports surged in early 2025 as firms rushed to avoid the tariffs, temporarily boosting GDP. Manufacturing faces the most risk, but energy and finance are expected to show resilience.

• Market Adaptability: So far, the broader pain has been contained to select sectors, and the resilience of both countries’ economies may temper the most severe outcomes. 5 

Canada’s Economic Conditions and Concerns

• Stable Growth: GDP growth is projected to reach approximately 1.8% in 2025, with inflation expected to remain near 2%. Canada maintains the lowest net debt among G7 nations and remains attractive for foreign investment due to high education levels, stability, and innovation-friendly policies. 6

• Cautious Outlook: Risks persist, particularly from trade tensions, slower immigration, and potential retaliatory tariffs; however, Canada’s diversified and stable economy helps buffer these shocks. 7

• Employment: Canada still boasts high employment in the G7, and lower population growth is now allowing GDP per capita to rise again. 8

Positive, Encouraging Investment Aspects

• Opportunities Amid Uncertainty: Both the US and Canadian stock markets offer diverse and high-quality investment opportunities, with sectors such as technology, industrials, and consumer discretionary in the US, and energy, financials, and innovative real estate in Canada standing out.

• Strong Fundamentals: The fundamentals across North America—stable growth, solid earnings, innovation-led sectors (such as AI, renewables, and digital infrastructure), robust banking systems, and moderate inflation—remain constructive for long-term investors. 9

• Policy Adaptability: Ongoing negotiations and policy responses have reduced the likelihood of worst-case trade outcomes, and the resilience of economic systems is being tested—offering opportunities for upside when uncertainty of tariffs subsides. 10

• An advantageous environment: Pro-growth policies, fiscal soundness, and openness to innovation position both countries for continued prosperity and new investment opportunities. 11 

In summary, as of July 2025, despite some uncertainty around trade and tariffs, both Canada and the US continue to display promising conditions for investors, with robust equity markets, innovation-driven sectors, and generally stable economic outlooks supported by lower rates and resilient fundamentals. Staying diversified and focusing on sectors with structural tailwinds—like tech, green energy, and quality real estate—offers a favourable path forward.

^{1 JP Morgan}  

^{2 JP Morgan}

^{3 Morningstar}

^{4 Canadian Chamber of Commerce}

^{5 CBC}

^{6 Bank of Canada, Government of Canada}

^{7 Government of Canada}

^{8 Government of Canada}

^{9 Bank of Canada, JP Morgan.}

^{10 Morningstar}

^{11 Government of Canada}