Market Outlook - April 2025

To sum up our outlook for the remainder of 2025, one could say we remain hopeful but hedged. Although, ‘hope’ is not a strategy, we maintain a positive outlook for the year-end, despite the current macro uncertainty, including the ongoing global tariff negotiations set to conclude by July. Our base-case scenario is predicated on the tariff tensions de-escalating or remaining contained and avoiding a global trade war. Central banks will be “data-dependant,” with the Fed holding rates or delivering a late-year cut if inflation continues to cool, while the BoC leads with its dovish stance and stubborn Canadian growth profile. On the corporate front, earnings are expected to grow modestly, led by strength in tech, Financials, and Industrials. Inflation is expected to moderate in the U.S. toward 2.7% by year-end and continue to soften in Canada, which should allow for real incomes and consumer sentiment to recover. Meanwhile, global growth should stabilize in the second half, with China and Europe avoiding recession and the U.S. remaining comparatively resilient.

The S&P 500’s path to 6,100 reflects a +15% upside from current levels, driven by broadening participation beyond tech, margin stability, and favourable liquidity if the Fed responds with a rate cut. For the TSX, a move to 26,500 (+10%) hinges on strength in energy, a continued recovery in financials, and solid commodity demand – especially if copper and gold remain elevated. From a risk management perspective, we feel risk remains high while the potential for a breakdown in tariff negotiations exists. There’s also speculation of renewed inflation pressure, or a sharp slowdown in consumer spending. However, barring a material shock, markets may well continue climbing the proverbial wall of worry – and occasionally trip on a microphone cable along the way.

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