March 2025 Market Commentary

March can be summarized as the count down to “Liberation Day” while investors and regular citizens alike wait on bated breath for the impending tariff hammer to drop. Meanwhile, the S&P 500 experienced significant volatility. The index faced a near 5% decline following reports of contracting U.S. factory activity, as the Institute for Supply Management’s manufacturing index fell to 49, indicating contraction. This downturn reflected growing investor concerns over the economic impact of increased tariffs and potential retaliatory measures from trading partners.

Conversely, the S&P/TSX Composite Index in Canada demonstrated resilience during the same period. On March 19, it closed up 1.5%, gaining 363.14 points to reach 25,069.21. This uptick was influenced by broad-based strength across sectors and a rally in U.S. stock markets, following Federal Reserve’s decision to maintain its outlook for interest rate cuts. However, underlying concerns about impending U.S. tariffs on Canadian goods, dubbed “Liberation Day” tariffs by President Trump, loomed over the market, with economists predicting significant job losses and a potential recession in Canada.

Investor sentiment throughout March was marked by caution and uncertainty. While U.S. private payrolls exceeded expectations with an addition of 155,000 jobs, indicating some of economic resilience, the overarching apprehension regarding trade policies tempered optimism. Major headlines focused on the potential fallout from the U.S.-China trade war, the Federal Reserve’s monetary policy stance, and Canada’s preparations for the economic impact of the new U.S. tariffs. These developments collectively contributed to a complex investments landscape, with markets reacting sensitively to policy announcements and economic indicators. From our perspective, while the situation remains fluid, it is the ‘unknown’ that is basically keeping a lid on the markets, while valuations converge as the MAG 7 stocks experience a reversion to the mean and the broader market is holding up.

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