The quarter began with a shock as sweeping tariff announcements rattled global markets, briefly driving the S&P 500 Index into correction territory. By mid-April, the outlook shifted dramatically. President Trump reversed many of the proposed trade policies, calming investor nerves and fuelling a V-shaped recovery. By the end of the quarter, major indices like the S&P 500 and the S&P/TSX Composite had not only rebounded but also registered impressive gains, driven by renewed optimism in sectors such as technology and materials.
International markets followed a similar pattern of disruption and recovery. Emerging markets outperformed, buoyed by strong demand for commodities and easing trade pressures. Developed markets also delivered solid returns, though European equities lagged.
While equity markets stole the spotlight, fixed income investors navigated their own share of volatility. Early in the quarter, bond yields dipped as investors sought safety amid tariff-induced uncertainties. By quarter-end, yields stabilized as central banks held firm on their policy rates. The U.S. Federal Reserve maintained rates at 4.5%, while the Bank of Canada kept its rate at 2.75%.
Geopolitical issues also dominated headlines, with escalating tensions in the Middle East (coupled with fluctuating oil prices) adding to investor uncertainty. Energy markets reflected this unease, as crude oil prices swung widely before settling lower by quarter-end.
Looking ahead, the back half of 2025 offers hope of a more stable outlook, with the rollback of tariffs and easing geopolitical tensions bringing much-needed clarity to markets. Investors are now focused on corporate profitability and the broader economic cycle, which, despite persistent challenges, continues to demonstrate resilience. Signs of strength, including a robust labour market, durable goods growth and record market highs, paint a picture of cautious optimism for the months ahead.
For further insights and a deeper dive into these events, tune in to our mid-year review podcast, where we unpack the trends shaping the investment landscape.
Find out more in our 2025 Second Quarter Market Review and Mid-year Commentary and stay up to date on the latest market trends with our weekly market commentary.