May 2025 Market Recap 

�� May 2025 Market Recap

A Month of Tariff Talks and Surprising Gains

Markets saw strong movement in May, driven by geopolitical developments and shifting trade dynamics. Early in the month, a surprise truce between the U.S. and China sent equity indexes sharply higher. Reduced tariffs on both sides gave markets a boost and helped shape positive sentiment mid-month.

Although volatility returned late in the month—thanks to judicial reversals on U.S. tariffs, a new round of steel tariffs, and delayed EU trade measures—markets largely held onto their gains.

Key economic developments included:

• Canada’s GDP rose 0.5% in Q1, with strength in vehicle and machinery exports

• Canadian inflation slowed to 1.7%, below the Bank of Canada’s 2% target

• U.S. inflation data came in cooler than expected, supporting equity markets

• U.S. GDP contracted slightly in Q1 (-0.3%), while job growth remained strong

• Moody’s downgraded the U.S. credit rating, echoing prior downgrades by S&P and Fitch

• Retail sales in Canada increased for a fourth straight quarter

Despite uncertainty around tariffs and politics, May closed on a relatively strong note for equities.

Looking ahead:

Central banks take the stage in June, with interest rate decisions from the Bank of Canada (June 4) and the Federal Reserve (June 18). Ongoing trade negotiations—particularly involving the U.S., EU, and China—will likely continue to drive headlines and market direction.