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What happened last week?
Markets were closed in the U.S. for the Memorial Day observances on Monday. Once the week was in full-swing it delivered 1 percent returns for Canadian equities and 1½ to 2 percent for American stocks. The Canadian dollar and bonds, as well as gold and oil declined.
King Charles delivered the speech from the throne to open the sitting of Parliament for the newly elected government under Prime Minister Mark Carney. The priorities to eliminate interprovincial trade barriers, develop more diverse international trading partners, deliver a middle class tax cut, increase housing, reduce sales tax on new houses, and manage immigration were reiterated. Throne speech
The most salient news for investors continues to be U.S. tariffs and their negotiations with other countries. Equities began the week with gains after President Trump announced, on Sunday, a postponement of the introduction of a new tariff of 50% on imports from the European Union. The increased tariff had been announced two days prior but are now delayed until at least July 9th. Expect more uncertainty based on a new 50% U.S. tariff on steel and tit-for-tat countermeasures. EU response to 50% tariffs
On Thursday, the U.S. Court of International Trade (USCIT) ruled that Trump did not have the authority to impose the program of tariffs, which sent stocks upward. After a prompt appeal by the administration, a federal appeals court placed a temporary hold on the USCIT ruling. Friday saw stocks decline in response to the continuation of restrictive trade tactics by President Trump.
NBC News and rulings
Additionally, U.S. inflation and monetary policy also provided input to stock performance. The Bureau of Economic Analysis reported that the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation indicator, had risen 2.1% on a year-over-year basis in April. It is the lowest reading since 2021. The Federal Reserve released the minutes from its May 6th and 7th interest rate meeting. Uncertainty surrounding trade and tariffs, and their impact on inflation, economic performance and employment, continues to dominate their analysis. The Federal Open Market Committee “judges that the risks of higher unemployment and higher inflation have risen.”
BEA PCE Fed's FOMC minutes
Canadian payroll employment decreased by 54,000 in March following a decline of 40,200 in February. On a year-over-year basis, payroll employment was up 32,800 despite the last two months of decline. Job vacancies have remained steady for the past seven months with 529,700 in March. StatsCan and employment
Canadian Gross Domestic Product (GDP) increased 0.5% in the first quarter of 2025, the same pace as the fourth quarter of 2024. An increase in exports in the first quarter of passenger vehicles (+16.7%), industrial machinery, equipment and parts (+12.0%) were driven by the looming threat of U.S. tariffs. However, lower exports of crude oil and bitumen (-2.5%) and refined petroleum energy products (-11.1%) were caused by the same reason. StatsCan Q1 GDP
What’s ahead for this week and beyond?
In Canada, quarterly labour productivity, imports, exports and trade balance, and an employment report including employment change, unemployment and participation rates will be reported. The Bank of Canada will release an interest rate decision and conduct a press conference on Wednesday morning.
In the U.S., several Purchasing Managers Indexes, construction spending, factory orders, durable goods orders, imports, exports and trade balance, nonfarm and government payrolls, nonfarm productivity and unit labour costs, participation and unemployment rates will be released.
Globally, Japan’s wages, household spending, capital spending and foreign reserves, China’s foreign exchange reserves and Purchasing Managers Indexes, and the Eurozone’s Consumer Price Index, Harmonized Index of Consumer Prices, Producer Price Index, employment change, unemployment rate, Gross Domestic Product and retail sales will be announced. The European Central Bank will release its Monetary Policy Statement and interest rate decision on Thursday.
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