Monthly highlights of major events which drive financial markets, along with perspectives on what they mean and why they matter.
May in review
In May, Canadian and U.S. equity markets posted strong gains, with the S&P/TSX Composite rising 5.46% and the S&P 500 increasing 5.57% in USD terms. Leading Canadian sectors included Consumer Discretionary (+10.03%), Information Technology (+8.88%), and Financials (+8.23%). In the U.S., top-performing sectors were Information Technology (+12.69%), Consumer Discretionary (+9.10%), Industrials (+9.04%), and Communication Services (+10.45%). Fixed income markets experienced modest declines, as the FTSE Canada Universe Bond index fell 0.63% and the Bloomberg U.S. Aggregate Bond index dropped 0.33% in USD terms. Commodities showed mixed performance: gold rose 4.42%, while oil (WTI) and natural gas prices declined sharply by 13.55% and 22.95%, respectively. Emerging markets also advanced, with the MSCI Emerging Markets index up 5.71%.
Here are some of May's most notable events:
Legal battles continue over President Trump’s “Liberation Day” tariffs. In late May, the U.S. Court of International Trade ruled that President Trump exceeded his authority by imposing broad “Liberation Day” tariffs, temporarily blocking their implementation. The court found that the president’s use of emergency powers under the International Emergency Economic Powers Act (IEEPA) to enforce sweeping tariffs violated the Constitution, which grants Congress exclusive control over trade. However, the Trump administration quickly appealed, and a federal appeals court promptly stayed the lower court’s ruling, allowing tariff collection to continue while the case proceeds—likely to the U.S. Supreme Court—leaving the tariffs’ future uncertain amid ongoing legal battles.
U.S. and China move to ease trade tensions. On May 12, the U.S. and China announced a 90-day pause on most tariffs, signaling a notable easing of prolonged trade tensions. The agreement reduced U.S. tariffs from 145% to 30% and Chinese tariffs from 125% to 10%, returning rates close to pre-“Liberation Day” levels set by President Trump on April 2. This development followed extensive negotiations and was welcomed by markets, with the S&P 500 rising 3.27% and the MSCI Emerging Markets index gaining 2.07%. However, by the end of May, both President Trump and President Xi accused each other of violating the agreement, casting uncertainty over its durability.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill (FTSE Canada 60 Day T-Bill) | 0.43 | 1.22 | 4.31 | 187.99 |
| Canadian Bonds (FTSE Canada Universe Bond) | -0.63 | 1.38 | 9.16 | 1,185.01 |
| Canadian Equities (S&P/TSX Composite) | 5.46 | 7.06 | 24.42 | 26,175.05 |
| U.S. Bonds (Barclays U.S. Aggregated Bond, US$) | -0.33 | 2.45 | 7.25 | 2,242.58 |
| U.S. Equities (S&P 500, US$) | 5.57 | 1.06 | 19.13 | 5,911.69 |
| Global Equities (MSCI World, US$) | 6.97 | 5.18 | 19.40 | 3,863.48 |
| Emerging Marketings (MSCI Emerging Markets, US$) | 5.71 | 8.86 | 14.26 | 1,157.34 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | 4.73 | 4.70 | 0.29 | 0.7279 |
| C$/Euro (€) | -0.17 | -4.47 | -5.72 | 0.6415 |
| C$/Pound (£) | 0.56 | -2.63 | -6.88 | 0.5410 |
| C$/Yen (¥) | 0.68 | -4.02 | -8.38 | 104.941 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | 4.42 | 22.03 | 35.28 | 3,315.40 |
| Oil WTI ($/barrel) | -13.55 | -12.96 | -18.33 | 60.79 |
| Natural Gas ($/MMBtu) | -22.95 | -2.13 | -0.63 | 3.45 |
†Total Return, as at May 31, 2025. Indices are quoted in their local currency.
Source: Bloomberg
Indices are not managed, and it is not possible to invest directly in an index.
Saudi Arabia commits to major U.S. investment. President Trump announced a landmark $600 billion multi-year investment commitment from Saudi Arabia in the United States, targeting energy, technology, defense, and infrastructure sectors. The package includes major technology acquisitions and aerospace deals, alongside a record $142 billion defense sales agreement for advanced military equipment and training. Saudi firms like DataVolt plan $20 billion investments in AI data centers and energy infrastructure, while U.S. companies such as Google, Oracle, and Boeing are key partners. This significant commitment signals a deepening economic partnership, supporting greater integration, encouraging innovation, generating employment opportunities, and enhancing regional security through ongoing cooperation.
Did you know?
Canada’s labour market showed continuing signs of softening in April, as the unemployment rate edged up to 6.9%. According to Statistics Canada, the economy added just 7,400 jobs which saw the employment rate—the proportion of the population aged 15 and older who are employed—fall a further 0.1 percentage points in April. This brought the employment rate to 60.8%, matching a recent low recorded in October 2024. Job losses were concentrated in full-time positions and among core-aged workers, with declines noted in sectors like manufacturing and wholesale and retail trade. Job gains in public administration helped offset the weakness but weren’t enough to reverse the trend.
