February 2025 Monthly Market Recap

February was mainly a negative month for stocks in Canada and the U.S. Although there was a rebound late in the month, the overall move for the month was down, and the selling seems to have continued into March. Despite good earnings from Canadian banks and large U.S. technology firms, the uncertainty over tariffs began showing up in economic numbers and painted a negative picture of the North American economy.

Tariffs raise prices and costs.  Uncertainty delays decisions. These two factors caused many businesses and individuals to lose confidence in their economic futures and reduce spending. This “hunker down in front of an approaching storm” mentality showed up in lower Consumer Confidence numbers and a lower Purchasing Manager’s Index, but then really hit hard with a New Orders number that showed a contraction in new factory orders and activity. Taken together, these numbers indicate a potential recession on the horizon.

I would now expect a lot more pressure on the Bank of Canada to reduce rates at their next meeting. Almost regardless of the tariffs, the uncertainty surrounding Canada’s role in the North American economy will keep our economy subdued. Interestingly, the U.S. economy also seems to be suffering from the threat of tariffs, but in their case, it is the fear of higher prices.

Although the full tariff regime has been delayed until April 2, I feel it should be noted that Trump’s rhetoric is starting to cause a loss of confidence in the economy and the stock market. Even the threat of tariffs is causing businesses to delay decisions. Other threats like the annexation of Canada, invasion of Greenland, taking control of the Panama Canal, and gutting the federal government of large number of employees, is hurting businesses in the U.S. and around the world. How many U.S. businesses around the world are dealing with a slowdown in business as consumers try to buy more locally and boycott American businesses?

Mike

Disclaimer:

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Michael Stott, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.