Key Takeaways November 2025
Markets at New Highs, But Leadership Is Narrow
North American equities hit new highs on cooler inflation and resilient Q3 earnings, but gains are increasingly concentrated in select sectors and mega-cap names. Day-to-day moves are being driven more by central bank messaging than the rate cuts themselves.
Index Scorecard (YTD Snapshot as of November 3rd, 2025)
- Nasdaq 100: ~ +22.5%
- TSX Composite: ~ +22%
- S&P 500: ~ +16%
- Dow Jones: ~ +11.5%
Growth and tech remain key drivers, but Canada has quietly kept pace, led by energy and materials.
October Shock, Fast Reversal
A sharp selloff followed tariff threats on Chinese imports, reminding investors how headline-sensitive markets remain. Sentiment quickly flipped as rhetoric softened, earnings surprised to the upside, and dip-buyers stepped in—underscoring how fragile confidence is, even in an uptrend.
Central Banks: Cuts With Conditions
The Fed’s October 29th cut and clearer liquidity path supported risk assets, but Chair Powell’s “not a foregone conclusion” message on future cuts kept markets on edge. Investors are now trading every word, not just every move.
Canada: Supportive, But Data-Dependent
The Bank of Canada’s 25 bps cut to 2.25% and contained inflation (around 2.4% y/y) are modest positives for banks, real estate, and bond investors. But with growth soft and employment cooling, the outlook—and any further cuts—will depend squarely on incoming data.
What We’re Watching Closely
- Inflation & Rates: Further cooling would validate cuts; any surprise higher could hit valuations.
- Market Breadth: A healthier backdrop requires more stocks—and sectors—joining the advance.
- Earnings: Banks and materials are holding up; tariff-sensitive healthcare and profit misses face harsher punishment.
- Tariffs & Policy Headlines: Sudden shifts can trigger sharp, fast corrections.
- Jobs & Wages: Slowing labour markets and wage trends will feed directly into growth and spending.
- Consumer Strength: Higher-income spending is resilient; lower-income pressure is shaping retail winners and losers.
- AI & Capex: Ongoing AI investment is a structural positive but disruptive for some industries.
Our Positioning
- Holding ~5% Cash: To lock in gains, provide a buffer, and preserve flexibility.
- Selective in Tech & Communication Services: Participating where earnings justify valuations.
- High-Quality Fixed Income: Used as a stabilizer and source of opportunity in a late-cycle, data-dependent environment.
What Could Shift Our Stance
More constructive if:
- Inflation continues to ease,
- Market breadth improves,
- Profit margins hold up.
More cautious if:
- Tariff risks escalate,
- Earnings downgrades broaden,
- Inflation re-accelerates and challenges the rate-cut narrative.
Big Picture
Market leadership is still tech-heavy, central banks are firmly data-dependent, and policy communication now moves markets as much as the decisions themselves. We’re positioned to participate—without ignoring the risk signals.