Canadian markets continued their upward momentum in June 2025, with the S&P/TSX Composite Index rising by 2.9% over the month. While equities held up well, the latest economic data pointed to early signs of softness in the broader economy.
| Index | May-2025 | Jun-2025 |
| S&P 500 Total Return | 6.3% | 5.1% |
| S&P/TSX Total Return | 5.6% | 2.9% |
Global Market Overview
The U.S. markets concluded the month with a robust performance, as the S&P 500 Total Return Index gained 5.1%. The headline CPI and core CPI remained stable at 2.4% and 2.8% year-over-year respectively, both in line with expectations. The Federal Reserve maintained its interest rate at 4.25%–4.50%, but officials hinted that they could consider reducing rates later this year if inflation continues to move in the right direction.
Geopolitical risks briefly rattled markets mid-month, as the U.S. launched targeted strikes on Iranian sites, marking a deeper involvement in the conflict between Iran and Israel. Oil prices spiked, and energy markets saw renewed volatility. However, a ceasefire before month-end calmed investor nerves. On the economic front, signs of a cooling labor market emerged, as only 139,000 jobs were added in June, and the unemployment rate remained at 4.2%. Additionally, economic growth expectations for Q2 remained soft following the contraction (-0.5%) during the first quarter.
Globally, trade and geopolitical tensions continue to be a source of concern. New tariffs and policy uncertainty weighed on manufacturing across developed economies. While inflation continues to cool in Europe, confidence remains shaky as global growth slows and business sentiment weakens.
Canadian Market Overview
Canadian equities rose in June, driven by gains in the tech and energy sectors. But the broader economic picture showed signs of cooling. GDP slipped by 0.1% in April, and early figures suggest a similar decline in May, raising the possibility of a technical recession. Unemployment increased to 7.0%, the highest level since 2016 (excluding the pandemic period), though job losses have remained relatively modest so far. Meanwhile, inflation data showed that it remained subdued, with headline CPI steady at 1.7%, while core inflation ticked down to 3.0%. The Bank of Canada left its policy rate unchanged at 2.75%, signaling patience as policymakers assess the evolving economic outlook. While they’ve made it clear they’re ready to act if needed, there was no indication of immediate rate cuts.
On the other hand, the Canadian dollar was stable, hovering around 0.7345 CAD/USD, supported by strong commodity prices, including a rebound in crude oil and record-high gold prices (~$3,300/oz). Still, consumer sentiment remains cautious. Retail sales are slowing, and early signs of a slowdown are emerging in Canada’s housing market, particularly in major cities.
Canadian Sector Performance
Performance across Canadian sectors reflected the macroeconomic backdrop: strong in commodities and growth sectors, weaker in defensive sectors.
- Information Technology (+4.5%): Continued momentum from AI and software firms lifted the sector. Shopify led gains after announcing new cross-border logistics features, and optimism around AI infrastructure remained high.
- Energy (+3.4%): Oil rallied after Middle East tensions spiked mid-month. Canadian producers gained significantly as WTI reached $84 per barrel.
- Consumer Staples (-1.4%): Underperformed as investors rotated into risk assets, and volume-driven retail names showed softness.
Important Dates
- July 15: U.S. and Canadian CPI Inflation (June)
- July 18: Canadian CPI Inflation
- July 24: Canadian Retail Sales
- July 30: Fed and BoC Rate Decision
Portfolio Strategy
June’s data signals a more fragile growth environment ahead. Investors should prioritize diversification, not just across sectors, but also across geographies and asset classes. Consider increasing exposure to high-quality fixed income as yields remain attractive, while maintaining allocation to energy, technology, and precious metals for inflation and geopolitical hedging.
Final Thoughts
Markets continued to trend upward in June, supported by strong commodity performance and easing inflation pressures, but not everything is running smoothly. Growth is losing steam, the job market is starting to show more softness, and global uncertainties (trade tensions and regional war in the Middle East) are making the outlook highly uncertain. The good news? Inflation is under control, at least for now, giving central banks more room to support growth if needed. This might be a good time to take a fresh look at your portfolio and stress-test it. As we enter the second half of 2025, staying flexible and focusing on quality, income, and resilience can make all the difference.