Staying Disciplined Amid Global Uncertainty

In his Q2 2025 market update, Blair Setford, AVP of Product Development with Canada Life Investment Management Ltd., highlights a volatile start to the quarter, driven by newly imposed tariffs that triggered a global sell-off in equities and bonds.

Despite this rocky beginning, markets rebounded in May, with the S&P 500 posting its strongest May performance since 1990. Still, the index remains flat year-to-date—one of its weakest starts in decades.¹

Blair notes that U.S. equities are underperforming global peers, while Canada’s S&P/TSX and other global benchmarks reached new highs by mid-June. This recovery was supported by easing trade tensions and reduced recession fears.

However, he also emphasizes that uncertainty remains high. Inflation is still elevated, trade disputes are unresolved, and geopolitical risks—particularly in the Middle East—are intensifying. These factors suggest continued market volatility.

In Canada, the Bank of Canada held its policy rate at 2.75% for a second consecutive time. Blair explains that this reflects concerns over U.S. trade policy, a soft domestic economy, and the potential for inflation to return. The Bank has indicated it may resume rate cuts if conditions worsen.²

Looking Ahead

Blair expects markets to remain headline-driven. Tariffs could reignite inflation and slow growth, while geopolitical tensions are pushing energy prices higher. Central banks are pausing rate changes as they await clearer economic signals.

Investment Strategy

Blair also stresses the importance of diversification. Canada Life Investment Management Ltd. Portfolio managers are maintaining a neutral portfolio allocation, avoiding concentrated bets and preparing for a return to more stable growth. This approach aims to balance risk and opportunity.

He concludes by encouraging investors to stay disciplined. Volatility is unsettling, but long-term success depends on sticking to a well-structured investment plan.

Sources:

1. Yahoo Finance. Friday May 30, 2025. Stock market today: S&P 500 marks best May in 30 years as Wall Street bets on tariff relief.

2. Source: Bloomberg

The views expressed in this commentary are those of Canada Life Investment Management Ltd. as at July 7, 2025 and are subject to change without notice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances. The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

This material may contain forward-looking information that reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 24, 2025. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Counsel mutual funds are managed by Canada Life Investment Management Ltd., a wholly owned indirect subsidiary of The Canada Life Assurance Company (“Canada Life”). Canada Life is a wholly owned subsidiary of Great West-Lifeco Inc. (TSX: GWO) and a member of the Power Corporation Group of companies.