To help you better understand the performance of funds presented in your quarterly statement, Bâtirente’s Investment Strategy Manager, Jean-François Dumais*, shares the economic and market highlights of 2025’s second quarter.
ECONOMY
Tariffs, economic growth, and inflation
The tariffs announced on April 2 on exports to the United States from most trade partners created uncertainty around economic growth and inflation prospects. However, a 90-day suspension in the implementation of these tariffs was announced on April 9.
Should these tariffs take effect on July 9, 2025, global economic growth could fall short of forecasts. At the same time, inflation might remain high or even intensify, further complicating the plans of central banks seeking to continue lowering their policy rates.
In this context, the global economy could go through a phase of stagflation, defined by economic stagnation coupled with persistent inflation. Such a scenario could lead to a recession, accompanied by significant job losses.
MARKETS
Equities
The economic conditions mentioned above led to strong market volatility in the second quarter. After a significant decline up to April 8, the markets underwent a notable rebound, leading to very positive results for the quarter.
On one side, the MSCI All Country World Index delivered a return of 5.7% (in Canadian dollars), driven especially by the exceptional performance of US stocks tied to artificial intelligence — the so-called “Magnificent Seven” — which rose by 21.0% (in Canadian dollars). On the other, the leading Canadian benchmark, the S&P/TSX, posted a very positive return of 8.5%, mainly supported by the strength of gold-related securities and the financial sector.
Bonds
The 90-day suspension on the implementation of tariffs led to a sell-off in bonds in favor of equities. This reallocation negatively impacted the bond market: the FTSE Canada Universe Bond Index posted a return of -0.5%.
Furthermore, long-term bonds saw a marked decline, as many investors grew concerned about high debt levels in most countries. As a result, the FTSE Canada Long-Term Bond Index showed an even more pronounced negative return of -2.1%.
2025 OUTLOOK
Expected volatility
Recent reactions in the financial markets suggest that Donald Trump’s presidency could bring increased volatility in the coming years. In such an environment, it becomes challenging to predict which asset classes will perform best. That is why maintaining a well-diversified investment strategy — across both asset classes and geographic regions — remains essential to better face uncertainty.
In a volatile environment, it is crucial to stay focused on long-term financial goals and to make decisions aligned with your investor profile. During market downturns, a periodic investment strategy can be advantageous, allowing you to take advantage of potential dips and benefit from possible rebounds — such as the one that began on April 9.
*Jean-François Dumais has worked as an Investment Strategy Manager at Bâtirente since 2019. Along with a Master of Business Administration (MBA) degree (Finance specialization). He has over 20 years’ experience in financial markets.