The week in the markets

• AI earnings: Broadcom posted record revenue, yet shares still fell.
• Capital expenditure financing: Alphabet's $80 billion stock raise turned the question to how companies pay for AI.
• Oil and rates: the Iran shrug finally cracked.

Why did some AI shares dip?

Broadcom (a U.S. semiconductor tech firm) did almost everything right. Revenue hit a record $22.2 billion, up 48%, and AI chip revenue more than doubled to $10.8 billion. Management called demand insatiable and predicted that future revenue would be even higher. The stock still fell by more than 15% on Thursday.

Nothing in the earnings report was bad. The problem was the set-up. Shares had run to record highs going in, AI expectations landed below the most optimistic estimates, and the company’s long-term target stayed put. After such a great run, very good results are seen as a letdown. It was the same story with Crowdstrike (an AI cybersecurity company); its stock fell, despite beating expectations and seeing its shares jump in recent months. Its stock did bounce back somewhat, however.

The fundamentals across AI are still strong; the expectations attached to them are stronger. When a stock is priced for a blowout, beating expectations is not enough.

How are companies paying for AI?

After Alphabet (Google’s parent company) announced plans to raise $80 billion from stock sales to fund data centres, its share price swiftly fell by about 4%. For two years, the market has been happy with the AI capital expenditure story, reading heavy spending as ambition. Selling that much stock to pay for it sends a different message, however. It puts dilution on the table and shifts the debate from how much they spend on AI to how they finance it, as well as how long investors have to wait for returns. The market is asking harder questions about the bill, and that has showed up in its reaction. But still, if you zoom out, the returns have still been absolutely incredible so far this year.

What impact did oil prices have on the markets?

For months, markets treated the Iran conflict as background noise. This week changed that a little. After the U.S. struck sites in Iran, and Iran fired missiles at Kuwait, oil rose and equities flinched. The S&P 500 Index snapped a nine-session winning streak, and the S&P/TSX Index shed nearly 370 points on Wednesday, after hitting a record high the day before.

Higher oil prices fed into bonds, pushing the 10-year yield toward 4.5% and the 30-year yield near 5% again; increasing rates put pressure on the expensive tech that has been leading the equities rally. By Thursday, a ceasefire pulled oil and yields back down, and started a rotation toward banks and retail stocks. Time will tell if this situation holds.

For Canada, higher oil supports the energy names on the Toronto Stock Exchange, but it also feeds inflation and puts pressure on the Bank of Canada, which now faces strong inflation and a technical recession. A very difficult spot.

What will jobs data and interest rate decisions tell us?

Next week brings two tests. Friday's U.S. jobs report should show about 85,000 new jobs for May, down from April. The Bank of Canada will make its interest rate decision on June 10, leaning toward a hold but watching every oil price movement. After a week where good news got punished and an old risk made more of an impact, the question is simple: with expectations this high, what counts as a positive surprise now?

Listen to the latest podcast from the IG Investment Strategy Team for further insights.

*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.

This commentary is published by IG Wealth Management. It represents the views of our Portfolio Managers, and is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. Investment products and services are offered through IG Wealth Management Inc. (in Québec, a firm in financial planning), a member of the Canadian Investor Protection Fund. Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated.

This document may include forward-looking statements based on certain assumptions and reflect current expectations. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.

Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.

© 2026 IGWM Inc. Reproduction or distribution of this commentary in any manner without the express written consent of IG Wealth Management is strictly prohibited. Please read Conditions of Use for more information concerning authorized uses of this document.

June 2026

Five ways to reduce income tax in Canada

Let's take a look at five key strategies to reduce income tax in Canada.

1. Lower your taxable income with RRSP and FHSA contributions

Contributing to a Registered Retirement Savings Plan (RRSP) is one of the most effective ways to reduce income tax in Canada. RRSP contributions are fully deductible, meaning that every dollar you contribute will reduce your taxable income by a dollar. This strategy is particularly beneficial if you're currently in a high tax bracket and expect to be in a lower bracket when you withdraw funds once you retire.

The First Home Savings Account (FHSA) is an excellent tax-saving option for first-time homebuyers. Like an RRSP, FHSA contributions reduce your taxable income dollar for dollar. Unlike RRSPs, withdrawals used to buy your first home are entirely tax-free. Using both the RRSP and FHSA can provide you with significant upfront tax savings and help you build your wealth (and get you into your first home) faster.

2. Maximize TFSA and RESP contributions

Canadian tax planning usually involves making contributions to a Tax-Free Savings Account (TFSA) or Registered Education Savings Plan (RESP). While contributions aren't tax deductible, they still provide considerable tax savings.

With a TFSA, all investment growth (including interest, dividends and capital gains) is tax-free, and withdrawals do not count as taxable income. This shelter from ongoing taxes helps you keep more of your investment income.

If you have children, an RESP can help build their education fund. Although you can't deduct contributions, the government's Canada Education Savings Grant (CESG) matches 20% of your first $2,500 contribution each year (up to a lifetime maximum of $7,200 in CESG). Investment growth is also tax-free, until your child makes withdrawals, at which point they're likely to be in a very low tax bracket.

3. Claim all applicable deductions, credits and government benefits that apply to you

Many taxpayers miss out on valuable credits and deductions that, when combined, can considerably reduce income tax in Canada. Frequently missed deductions and credits include:

• Medical expenses: if eligible medical costs exceed a set percentage of your income, you can claim a credit.
• Charitable donations: federal and provincial tax credits for donations increase substantially for total gifts above $200. You can combine donations with those of your spouse to maximize the overall tax credit.
• Child care expenses: these include daycare and overnight/summer camps.
• The Disability Tax Credit: a non-refundable credit for individuals with disabilities or family members who support them.

Claiming every available benefit, such as the Canada Child Benefit (CCB) or GST/HST credit, can also help grow your wealth faster.

4. Make tax-wise investment choices

As we’ve seen, it makes sense to hold your investments in registered accounts (such as RRSPs, FHSAs, TFSAs and RESPs). However, if you max out these accounts and need to place some investments in non-registered accounts, any income from these assets will be classed as taxable income.

It’s important to know, therefore, which investments to place in your non-registered accounts, given that some investment income gets favourable tax treatment from the CRA. These investments should also align with your risk tolerance level.

Interest income from GICs or bonds is taxed at your full marginal rate, making it the least tax-efficient. It’s wise to hold these investments inside registered accounts.

Capital gains, which occur when you sell investments (such as stocks and mutual funds) at a profit, are only partially taxable (currently 50%). Eligible Canadian dividend payments also get preferred tax treatment. It makes sense therefore to hold assets that are likely to make capital gains and earn dividends in non-registered accounts.

It’s also crucial to cash in investments needed to provide retirement income in a tax-efficient way. By diversifying your retirement income sources (for example, by including withdrawals from TFSAs and tax-free returns of capital from non-registered accounts) you can considerably reduce your taxable income and therefore your tax bill.

5. Maximize available deductions if you’re self-employed

If you’re self-employed, you have greater options for reducing your taxable income, including deducting reasonable expenses incurred to earn business income. These deductions include a share of home office costs (utilities, internet, insurance, etc.), vehicle expenses for business use, professional fees and equipment purchases.

Careful tracking of every eligible expense could greatly lower your taxable business income and therefore your tax bill.

Your IG Advisor can help you keep more of what you earn

Now you’ve learned how to reduce income tax in Canada, the next step is to minimize it as much as possible. Canadian tax rules are complex, and everyone’s finances are different, so getting expert Canadian tax planning advice could save you thousands.

Speak with your IG Advisor for personalized guidance to help minimize your income taxes. With their knowledge of your full financial picture, they could uncover tax-saving opportunities that your accountant might miss. Talk to your IG Advisor today to discuss ways to reduce your income tax. If you don’t have an IG Advisor, you can find one here.

Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Advisor.

Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.

The Canada Education Savings Grant and Canada Learning Bond (CLB) are provided by the Government of Canada. CLB eligibility depends on family income levels. Some provinces make education savings grants available to their residents.

June 2026

How to pass on your primary residence fairly

It can be a big challenge to keep your will fair when you're leaving one home but have several children. These strategies can help you to achieve it.

Many of us understand the importance of having a will: around half of Canadians have one. However, drawing up a will that's completely fair to all your beneficiaries (the people who are in line to receive your belongings and assets, usually your spouse and children) is considerably more complex.

It can be particularly complicated if you have just one property (your home, or primary residence) and several children. Many parents want to leave the same amount to each child in their will; this is not just a question of treating each child the same, but doing so can also avoid leaving behind resentment among siblings or even prevent your will from being contested.

This can become particularly complicated if any of the children are living in the home or want to live there.

The emotional and practical aspects of dividing one property among several children can be challenging. Let's explore various strategies that can help you pass on your primary residence fairly.

The problem with bequeathing one property to all your children

One approach to passing on a home is to grant each child an equal share of its ownership. While this is certainly one way to ensure a fair will, it can lead to several issues down the line. For instance, disagreements may arise over how to manage the property, including whether to rent it out or sell it.

One sibling might want to keep the home as a family legacy, while another might prefer to sell it and cash in its value. If one sibling is not able to buy out the others, this could put a strain on family relationships or even lead to legal disputes.

Furthermore, if one sibling lives in the home and relies on it as their primary residence, this could create a power imbalance and lead to resentment. There are typically better strategies for passing on your home fairly.

Give the property to one child and compensate the others financially

An alternative approach is to give the property to just one of your children. Obviously, to make this fair, you would need to provide your other children with an inheritance that's equal in value to your home at the time of your death.

This method requires planning and an accurate assessment of your property's market value (a real estate appraiser can help you determine this). You can then distribute in your will other assets, such as investments, savings or other belongings to balance out the inheritance. Problems can arise if there is a large discrepancy between the value of your home and your remaining assets.

Also, the property's fair market value should be assessed on death, rather than when the will is made (given that the property in question could have increased or decreased in value considerably in the interim). Alternately, several valuations could be obtained over the timeframe, with an average value being used.

What to include when calculating your whole estate's value

To ensure a fair distribution, it's crucial to have a comprehensive understanding of your total assets' value upon passing away. This includes:

• Assets: include the value of your primary residence and investments (such as RRSPs, TFSAs and other savings).
• Valuables: don't forget to include valuable personal items, like jewellery, watches, art and collectibles. These items can greatly affect the overall value of your estate.
• Liabilities: you also need to include any outstanding debts, such as a mortgage, credit card balances and loans. These will reduce the net value of your estate.

While leaving a primary residence in your will won't usually bring about the headache of capital gains tax, if the final years were spent in a care home or similar residence, there could be some tax implications, so you should bear these in mind when calculating the final value of your home.

By having a precise figure for your entire estate, you can better plan how to distribute it fairly among your children.

Consider previous financial help

To be completely fair, you should also add any previous financial help to your calculations. For example, if you helped one child with a down payment on their first home or paid for their wedding, you might want to have this reflected in their inheritance.

This can help avoid feelings of favouritism and ensure that your will is a true reflection of your overall gifts to your children.

Put a clause in your will to sell the home

One option to reduce potential disputes is to include a clause in your will that instructs your executor to sell your home after you die and split the proceeds equally among your children. In fact, this is the most common outcome, even if you don't stipulate this in your will.

This approach ensures that each child receives an equal amount without the complications of co-ownership. However, this method can be emotionally challenging if any family member wants to keep the home, and it can potentially get messy. However, you can avoid this by giving your executor the necessary power to sell the home on your behalf and distribute the proceeds.

Make up for any shortfalls with life insurance

Many people's biggest asset is their home, and it's rare that they would also have enough assets to give to their other children that are of equal value (especially in certain Canadian cities, where homes can sell for several million dollars).

This is where life insurance can come into play. The proceeds from a life insurance payout can be given to your children who didn't receive the home in your will. An IG Advisor can help you work out how much coverage you should sign up for to ensure your will is fair.

Be open and communicative about your decisions

Discussing your plans with your children is key to ensuring they understand and appreciate your intentions and have the opportunity to voice their opinions.

This transparency can help reduce the likelihood of any disputes and allow you to adjust your plans if necessary. Your children will be more willing to accept your wishes as laid out in your will and will be less likely to contest it.

Get help in making a fair will

As we've seen, developing a fair will that satisfies all your children can be complex, particularly when you have one large piece of real estate like your home to include. An IG Advisor can help you balance out your will so that each child is fairly treated, including bringing life insurance into the mix if necessary.

They can also help you develop an estate plan that includes all aspects of making sure your wishes are followed, including the need for a power of attorney and how to leave a charitable gift in the most tax-efficient way possible.

If you think you may need help making your will fair for all your children, contact your IG Advisor today to discuss ways they can help you to achieve this. If you don’t have an IG Advisor, you can find one here.

Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.

Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Canada Life Assurance Company (outside of Québec).

March 2026

Finding the right buyer for your business

After going through a lot of hard work to make your business a success, the next most difficult task is often finding the right buyer when you’re ready to put it up for sale. In this article you’ll learn everything you need to know to find the right buyer, at the right price.

Key takeaways:

• How to prepare your business for sale.
• Setting the asking price.
• Identifying the right buyer.
• Marketing your business.
• Getting help with the process.

Your business is your baby; it's a reflection of you, your vision and years of dedication. Therefore, when it’s time to sell, you don’t want to hand it over to just anybody. Finding the right buyer is among the most pivotal decisions you'll make. It’s a process that needs a combination of thorough preparation, objective analysis and effective outreach.

When it comes time to sell your business, beyond simply maximizing your financial return (which is certainly important), you also want to ensure your business continues to thrive under its new owner. With thoughtful planning, you can find a buyer whose values resonate with your own and who offers fair terms for your years of dedication.

Preparing your business for sale

Proper preparation is key and should begin well before you want to finalize the sale. A common mistake is trying to put your business on the market before it’s truly ready, which can often result in lengthy negotiations and/or low offers. To get the interest of serious buyers, you'll need to show that your business is both stable and positioned for continued growth.

Are your finances in good order?

Transparent and accurate financial statements are crucial for a successful sale. Buyers usually expect to review three to five years of audited or reviewed figures.

They'll want to scrutinize metrics like EBITDA (earnings before interest, taxes, depreciation and amortization), the consistency of your cash flow and your debt-to-equity ratios. Be clear about any changes, like personal expenses or extra costs, so buyers know how much money your business can make.

Can your business continue without you?

If your business relies too heavily on your day-to-day involvement, selling it can be more difficult. Buyers want operations that can run smoothly, independently of their owner.

Document all processes, standard operating procedures and supply chain logistics. The more independent your business is from you, the more appealing — and less risky — it will be to potential buyers.

Is your market positioning competitive?

Sophisticated buyers will carefully examine your position in the marketplace. You need to be able to communicate what sets your business apart and how it compares to your competitors. Sharing a SWOT (strengths, weaknesses, opportunities and threats) analysis will provide a realistic understanding of your competitive landscape and where growth opportunities exist.

Who are your key employees?

The strength of your management team can be a deciding factor in the sale. Buyers will want details about the experience, tenure and future intentions of your leadership group. Arrangements like bonuses or formal contracts can make a buyer feel more confident that the company's most important people will stay after the sale.

Do you have any valuable intellectual property?

Ensure that all intellectual property — including trademarks, patents, software and copyrights — is documented and properly registered. While strong IP can add significant value to your business, its legal status needs to be secure and uncontested.

Setting your price

Arriving at an appropriate price requires both analytical rigour and awareness of the broader market. An unrealistically high price may deter genuine buyers, while undervaluing your business can mean missing out on hard-earned rewards. There are several resources you can turn to when deciding on your asking price.

You should first lean on your professional network; you can gather insights from peers who have sold similar businesses. These real-world perspectives are valuable but shouldn’t be your sole reference.

Your circle of professional advisors — legal, financial and accounting experts — can help provide formal valuations using methodologies such as discounted cash flow or comparable company analysis. They can also help explain the tax consequences of different deal structures, which can have a significant impact on the amount of money you’ll ultimately receive. Your IG Advisor can provide significant resources for valuing your business (more on that later).

Finally, trade associations can provide industry benchmarks. These organizations typically track recent transactions, allowing you to check your valuation against market standards.

Identifying the right buyer

Not all buyers have the same motivations, so it’s important to understand who you’re engaging with and what drives their decision-making.

Strategic buyers

These could be competitors or related firms that are drawn to synergies and integration opportunities. They may value your customer relationships, footprint or technology, and are often prepared to pay a premium for those assets that bolster their own businesses.

Financial buyers

Private equity firms and other investors focus on ROI. Strong recurring revenue, solid management and growth potential attract this group. Their approach is typically analytical, with close attention to your numbers and future projections.

Individual buyers

Experienced managers or entrepreneurs transitioning into business ownership may offer the most personal approach. While their resources may be more limited, they often have an interest in maintaining the existing culture and brand identity.

Marketing your business

After you know what you want and who you want to sell to, you can make a marketing plan that'll help you reach the right people. Your marketing package should include:

• A high-level summary of your business, highlighting its most attractive features.
• A comprehensive package that provides key details about your company without revealing sensitive information.
• The asking price and details of how you reached that value.

Some of this information will only be provided to prospective buyers after they sign a non-disclosure agreement.

You should also decide on which means to use to get your message out there. This could include digital business marketplaces, direct contact with potential buyers in your industry and professional networks.

You don’t have to do this alone

Your IG Advisor can help you prepare for the sale of your business and provide you with tools for finding the right buyer.

Through your IG Advisor, you can access interVal, an online tool that can provide you with a free estimate of the value of your company. If your business has sales of over $20 million, they can also introduce you to IG Private Company Advisory (PCA). The PCA team has deep experience of helping entrepreneurs sell their business and can draw from a large network of potential buyers.

The PCA team can help with deal sourcing, valuation and strategies for maximizing your company’s value. Talk to your IG Advisor about how they can help you to find the right buyer for your business. If you don’t have an IG Advisor, you can find one here.

Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Advisor.

Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.

June 20, 2025

The week in the markets

The Fed’s inflation warning caught markets off guard…

• The U.S. Federal Reserve held rates steady but warned of potential tariff-led inflation.
• Market reaction was muted, rate cut expectations were unchanged and the urgent need for cuts was downplayed.
• Geopolitical fears flared, as the U.S. reportedly prepared for a potential strike on Iran, pressuring risk assets.

The week in the markets - Jun 20 | IG Wealth Management

The U.S. Federal Reserve (the Fed) left rates unchanged at 4.25-4.5% for the fourth consecutive meeting, with Fed policymakers still expecting two rate cuts later in 2025. However, the market’s attention quickly shifted to Fed Chair Powell’s press conference. His key comment, “We expect a meaningful amount of inflation in coming months,” caught traders off guard, especially as he acknowledged signs that companies plan to pass on higher costs from tariffs. Powell emphasized uncertainty about the size, scope and duration of tariff impacts. The result was a volatile trading session that saw stocks swing on Powell’s tone and a barrage of President Trump headlines about Iran. Equities finished flat, yields held steady and traders were left with more questions than answers.

Beyond the press conference’s usual drama, the Fed’s updated projections hinted at a more stagflationary backdrop: GDP forecasts for 2025 were revised down to 1.4% from 1.7%, while inflation was revised up to 3.1% from 2.8%. Despite that, the median forecast for 2025 still calls for two rate cuts, with fewer reductions expected in 2026 and 2027. Fed Chair Powell acknowledged labour markets remain solid, but also noted a “very, very slow cooling.” The Fed appears in no rush, preferring to “wait and learn more” before adjusting policy, especially with tariff effects still uncertain, and fiscal developments evolving.

Global markets turned away from risk after Trump was reported as saying that he will decide within the next two weeks whether the U.S. will be directly involved in striking Iran. Oil surged on supply concerns. Any U.S. action could trigger a knee-jerk market reaction, with safe-haven demand for Treasuries and gold likely to rise. However, we suggest you listen to this week's podcast to know more about investing in times of geopolitical turbulence. Investors are now weighing the inflationary risk of higher oil prices against a Fed still trying to assess the real economic toll of tariffs. As geopolitical tensions mount, risk appetite is fading.

While U.S. markets were closed on Thursday of this week, they weren’t quiet on Friday, which saw the largest June options expiry on record (options are contracts to buy or sell an asset at an agreed price, at a later date). Plus, with Middle East risk likely to remain front and centre for some time, the Fed may be standing still, but the world isn’t.

More information via the Living Market podcast, episode 158 – Geopolitics versus your portfolio: what’s the real impact?

*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.

This commentary is published by IG Wealth Management and is provided as a general source of information. It is not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. Investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm) and Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently and past performance may not be repeated.

This document may include forward-looking statements based on certain assumptions and reflect current expectations. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.

Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.

© Copyright 2025 Investors Group Inc. Reproduction or distribution of this commentary in any manner without the express written consent of IG Wealth Management is strictly prohibited. Please read Conditions of Use for more information concerning authorized uses of this document.

May 30, 2025

No Political Shocks, No Market Shocks - But the potential is there

Now that the election dust has settled and the Liberal minority is confirmed, it's time to step back and think about what it really means for the Canadian market and currency.

For the most sensitive aspect of the economy right now, trade policy, the situation remains fluid, but there's a case to be made for more stability ahead. The Prime Minister's international reputation and experience should help smooth relations with the U.S. — or at least prevent unnecessary friction — which adds another layer of certainty for businesses and investors. Simply put: one less thing to worry about.

Energy and resources policy is the area to watch when it comes to politics and markets. In theory, any shift should be positive: it's already extremely difficult to add new restrictions, and a more pragmatic tone from the Liberals could be a tailwind for Canadian producers. If energy policy turns out to be even mildly supportive, the sector might regain some momentum, especially if global demand stays healthy.

Looking at the market more broadly, though: Canadian stocks are more sensitive to global trade flows and commodity prices than to domestic politics. Election results rarely move our markets dramatically, and this one is no exception. As for the currency, first and foremost: it's still all about the rate differential with the United States. The narrower the spread between Canadian and U.S. rates, the stronger the loonie tends to get. With a Liberal minority, there's now a possibility of supportive fiscal policies, including potential tax cuts, which could bolster the Canadian economy, giving an extra boost to the Canadian dollar. (Which, by the way, isn't necessarily great news for exporters or Canadian equity returns.)

In summary, here's the 3 things we are watching:

1. Energy/Resources Policy – An expanded resources policy should provide a tailwind for the sector and support broader market performance.
2. Tax Policy – Proposed tax cuts are likely to stimulate the economy. A stronger economic backdrop could, in turn, slow the pace of Bank of Canada rate cuts, limiting downside pressure on the Canadian dollar. If the fiscal measures prove genuinely supportive over the longer term, the loonie could trend higher over the next two to five years.
3. Tariff Policy – With deep experience in crisis management and strong global connections, Carney’s leadership is well positioned to deliver constructive outcomes on trade. A positive resolution on tariffs would be a clear boost for both the Canadian economy and the loonie.

Overall, we don’t see the election results moving markets in any meaningful way over the near-term. With the election behind us, one element of uncertainty has been removed, and that’s a good thing. The bigger picture is towards the future and what policies the new government introduces and what it may mean for the Canadian economy and markets.

Tune into the IG Living Market Podcast, The week in the markets, and follow the team on LinkedIn.

Philip Petursson, Chief Investment Strategist

Pierre-Benoît Gauthier, Vice-President, Investment Strategy

Ashish Utarid, Assistant Vice-President, Investment Strategy

This commentary is published by IG Wealth Management. It represents the views of our Portfolio Managers and is provided as a general source of information. It is not intended to provide investment advice or as an endorsement of any investment. Some of the securities mentioned may be owned by IG Wealth Management or its mutual funds, or by portfolios managed by our external advisors. Every effort has been made to ensure that the material contained in the commentary is accurate at the time of publication, however, IG Wealth Management cannot guarantee the accuracy or the completeness of such material and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently, and past performance may not be repeated.

This commentary may contain forward-looking information which reflect 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 April 29, 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. Mutual Funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). Additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Trademarks including IG Wealth Management are owned by IGM Financial Inc. and licensed to subsidiary corporations.

April 9, 2025

Finding opportunity amid trade war uncertainty

Investor sentiment turned cautious in the first quarter of 2025, as markets faced heightened uncertainty stemming from significant shifts in U.S. trade policy. These changes, driven by the return of President Trump, led to increased volatility in North American markets, testing investor resilience. While the S&P/TSX Composite Index posted modest gains, the S&P 500 underperformed. In contrast, developed European markets significantly outperformed, benefiting from a rotation away from U.S. equities toward Europe. This shift reflected investors' perception of stronger global growth potential and Europe's relatively attractive valuations compared to U.S. equities.

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The return of President Trump and his abrupt shift in U.S. trade policy toward longstanding trade partners — most notably Canada, Mexico and China — had a considerable impact on equity and bond performance. The unpredictable nature of these tariffs, particularly those targeting Canada, created volatility in equity markets as investors grappled with “on-again, off-again” announcements and hastily introduced sector-specific carve-outs. This uncertainty, coupled with the risk of escalating reciprocal trade tariffs, weighed heavily on the S&P 500, potentially impacting earnings growth.

Despite the challenges posed by trade disruptions, the market still expects year-over-year earnings growth to remain in the low- to mid-teens. The strength in manufacturing provides a glimmer of hope. Although the U.S. administration's initial deregulation efforts offered some early support to the market, this was quickly overshadowed by rising trade tensions.

“Diversification across sectors, asset classes and geographical regions, and remaining focused on the long term will be key to weathering short-term turbulence.” Philip Petursson

Looking ahead, we remain optimistic, despite recent market volatility and lingering uncertainties. While U.S. equities have faced challenges, including a pullback from February highs and sensitivity to tariff concerns, other regions, such as Canada, Europe and emerging markets, offer compelling opportunities. These regions have shown resilience, supported by stronger fundamentals and more attractive valuations compared to U.S. markets.

Ongoing volatility, driven by evolving and unpredictable U.S. trade policies, has created uncertainty in global markets. Diversification across sectors, asset classes and geographical regions, and remaining focused on the long term will be key to weathering short-term turbulence.

Find out more in our 2025 First Quarter Market Review and stay up to date on the latest market trends with our weekly market commentary.

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March 5, 2025

Time to be a hunter, not a sheep

Crazy, but that's how it goes
Millions of people living as foes
Maybe it's not too late
To learn how to love
And forget how to hate

~Crazy Train by Ozzy Osbourne

A client-facing email template will be available on AdvantagePlus tomorrow for you to share with clients. The email below is also shareable but contains more technical details.

After weeks of posturing, threats and delays, President Trump announced the implementation of a 25% tariff on all products into the United States from Canada excluding energy products which will see a tariff of 10%. Mexico faces a similar 25% tariff while China will see an additional 10% added to its already existing 10% tariff. Let's make no mistake about it, the reasoning offered by Commerce Secretary Howard Lutnik that this is a war on drugs is a farce. This is the outcome when eternally stubborn combines with unmitigated lunacy. Regardless of the reasoning, businesses, consumers and investors are left holding the bag and paying the price for the Trump ideology.

The immediate reaction has been negative as major equity markets around the world fell in response to the announcement. The EuroStoxx 600 fell by 2.14% on the day. The S&P 500 Index had fallen by as much as 2% intraday before closing down -1.22%. In Canada, the S&P/TSX Composite Index fell by -1.72%.

Let's put aside the politics for now and bring out the strategy playbook. We see three key outcomes to the current environment.

1. Economic growth will take a (temporary) hit.

In Canada and the United States, the tariffs are likely to trim economic growth for as long as they remain in place. The tariffs are a tax, whether borne by the importer or the ultimate consumer, someone pays. This will drive up the cost of just about everything imported by the United States from China, Canada or Mexico.

Exports to the United States represent 76% of total Canadian exports as of the 12-months ending 2024. These exports account for almost 20% of our GDP. In its recent Monetary Policy Report the BoC forecast GDP growth of 1.8% for 2025 excluding any negative effect from tariffs. In the Bank's analysis, a 25% tariff on all exports to the United States would have an approximate 2.5% detraction in economic activity for Canada in 2025. Taking the two assumptions, should the tariffs remain in place for the entirety of the year the Canadian economy would likely fall into recession.

The increased costs to consumers and reciprocal tariffs by Canada and Mexico are also likely to trim US GDP. According to Yale University researchers, the announced tariffs are projected to reduce real GDP in the United States by 0.6% in 2025 (The Fiscal, Economic, and Distributional Effects of 20% Tariffs on China and 25% Tariffs on Canada and Mexico I The Budget Lab at Yale). The potential hit to consumer sentiment could push growth further on weaker consumption.

A trade war would have implications for businesses and consumers on both sides of the border. For Americans, the U.S. tariffs would be most apparent in their impact on prices. Given how widespread they are, tariffs would undoubtedly raise the cost of living in the United States. Any business or consumer who buys a product made in, or that has inputs from, Canada, China or Mexico would face higher prices. This would be true for everything from houses, to cars, to groceries, to gasoline.

Keep in mind however, that the economic weakness and potential for a modest recession in either country is manufactured as opposed to a by-product of something else broken with the economy. And therefore, any weakness is as temporary as the tariffs themselves. To that end, given only a fool would want to cause long-term distress to his economy its reasonable to expect a deal to return to the status quo will be reached before long.

2. Central Banks may, and may not, provide a reprieve (depends on which central bank).

The Bank of Canada has a policy announcement next week. Bond investors are now pricing in a more than 90% probability that the BoC will cut by another 25 bps taking the overnight rate to 2.75%. In Canada, the impact may be felt more in economic growth rather than inflation. Governor Macklem has stated that monetary policy cannot offset tariffs, but can help the economy adjust. We believe that the BoC may take the policy rate below our earlier assumed terminal rate of 2.5% to between 2 and 2.25% depending on how long the tariffs remain in place. This is likely to be more gradual. The longer the tariffs remain, the deeper the cut.

In contrast, the U.S. Federal Open Market Committee may not be as quick to provide monetary support in the face of tariffs. Recent comments by Fed officials lean towards remaining inflation concerns. Despite current market pricing for 3 cuts of 25 bps by the Fed for 2025 (June, September, and December) the risk to inflation from the tariffs may outweigh the potential for labor market weakness. We expect 1-2 Fed cuts through the year, and more likely later than sooner. A last point here is that the FOMC may not see it as their job to fix what the White House broke. If labor market and economic weakness is the consequence of Trump policy, the Fed may see it as up to the government to adjust the policy that precipitated the weakness.

If we are correct in the difference in policy approach, then we would also expect a reaction in the currency markets. The Canadian dollar dipped below US$0.69 during the day. Fair value based on the above policy expectations would suggest a level for the Canadian dollar of US$0.67. The risks to the Canadian dollar lean to the downside. This is in part a good news/bad news story. The bad news is that U.S. imported goods will become even more expensive. The good news is that a weaker loonie will offset some of the tariff impact; in particular on the energy front with the lower 10% tariffs being nearly completely offset by the drop in the Canadian dollar over the last 6 months.

3. Out of chaos comes opportunity.

First of all, it is boring, it is not special or original, but diversification is key. European markets are still up massively year-to-date, and Chinese markets have shown the same resilience. Gold remains volatile but tends to react positively to tariff news. As expected, government bonds are performing extremely well, offering a safe haven.

Of course, diversification isn't a magic bullet-it can soften the blow, but it doesn't eliminate it. That said, while the situation is frustrating, it's also temporary. The only real way through this is patience. Market shocks like these tend to create opportunities. Case in point: the Magnificent Seven stocks have already shed US$2.4 trillion in market capitalization from their highs. Great companies will stumble, and when they do, they'll present attractive entry points.

Putting it into perspective

Despite all the political chaos, not limited to just the tariff announcement, the S&P 500 Index is down a mere 5% from its all-time high of February 19th. The volatility feels worse than it is because of what I can only call the headline effect. If we keep being told how awful things are, we start to believe it and our perception of things become amplified. A 5% drop would fall into the category of normal market activity. That's not to trivialize things. Nor to say the volatility can't continue. It can. Volatility is a function of the markets - equity, commodity or bond.

We have just come through a stellar earnings season. S&P 500 companies reported 13.2% earnings growth year-on­year. Unemployment in the United States and Canada sits at 4% and 6.6% respectively - still low from an historical perspective. The earnings outlook for both the S&P 500 and S&P/TSX Composite Indices are in the mid-teens. Should tariffs extend through 2025 we would trim US earnings by half while trimming TSX earnings by only a couple of percentage points. The general view is that US equities and US multinational companies will bear the worst of the tariff tantrum. The majority of Canadian exports excluding energy, are largely produced by international subsidiaries. Therefore the impact to the TSX should be less than that of the S&P 500. Regardless, we see this as more a disruptive event rather than a destructive event.

The tariffs may continue for the time being, but they won't last. Equity volatility may continue for the time being, but it won't last. In the meantime, a diversified portfolio should weather the tariff storm well until opportunities start to present themselves.

This is a time to be a hunter, not a sheep. Hunters know when to wait, when to act, and when to take the long game seriously.