Daily market snapshot

Monday 1/5/2026 p.m.

• The U.S. captures Venezuelan leaders: What are the implications – Over the weekend, the U.S. military executed a mission to capture Venezuelan leader Nicolas Maduro and his wife Cilia Flores. They were flown to New York and charged with narco-terrorism conspiracy and other crimes. Perhaps most notably, the U.S. administration has indicated that the U.S. would now run Venezuela until a safe and judicious transition of power takes place. In addition, the U.S. is planning to rebuild the oil infrastructure in Venezuela, with support from major U.S. energy companies.
  
  What are the implications of these actions? From a macroeconomic perspective, we know Venezuela is a relatively small player. Its economy is less than 1% of global GDP, and it represents less than 1% of U.S. and global trade. The country does have about 17% of global oil reserves, but due to failing infrastructure, they deliver just about 1% of global production. Thus, assuming these tensions remain contained, there is likely limited systemic risk to the broader global economy.
  
  However, perhaps the broader implication to monitor is the precedent this action may set globally, especially given that the U.S. plans to retain power in Venezuela until a transition of government occurs. It is early days still, but this will be a longer tail risk to watch, particularly as economies like China and Russia strategize their own next steps.
   
• Market reactions to the Venezuelan actions were muted – As expected, the market reactions to the geopolitical actions in Venezuela were largely contained. Stock markets in the U.S. closed solidly higher, with the Dow Jones leading the S&P 500 and Canadian TSX. There was also a rise in safe-haven assets, with U.S. Treasury bonds and gold higher on Monday as well. On the commodity front, we are seeing some upward pressure on oil prices, with WTI crude oil up about 1.8% to around $58.30. However, keep in mind that oil prices started near multi-year lows as oil markets globally continue to face oversupply. Notably, large U.S. oil companies did rise as well, with companies like Chevron, Marathon, and Valero Energy all up 5% - 10% on Monday.
   
• U.S. economic and labor market data in focus this week as well – This week also brings a full slate of economic releases that will offer an updated read on both overall activity and labor‑market conditions. Key reports include U.S. ADP private payrolls, ISM Services, JOLTS job openings, and factory orders on Wednesday; initial jobless claims and productivity/unit labor costs on Thursday; and the December jobs report for the U.S. and Canada on Friday*. Recent jobs data has shown mixed signals, with U.S. unemployment rising to 4.6%, a four‑year high, but largely for the "right" reasons as more workers re‑entered the labor force*. Friday's report is expected to indicate about 60,000 jobs added, in-line with recent trends of sub-100,000 job growth, and the unemployment rate to tick lower, from 4.6% to 4.5%. Overall, we continue to see a U.S. labor market characterized by a continued low‑hiring, low‑firing environment. We expect monthly job gains to firm modestly into the 50,000–100,000 range, while a smaller labor supply—partly reflecting lower immigration—keeps unemployment near 4.5% in 2026.

Mona Mahajan;
Investment Strategy

^{Sources: *Bloomberg}

Friday 1/2/2026 p.m.

• Stocks kick off 2026 mostly higher - Global equities rose on the first trading day of the year, supported by renewed enthusiasm around AI in China, pro‑cyclical leadership from U.S. small- and mid-cap stocks, and energy-sector gains in Canada*. Asian markets set an upbeat tone overnight after DeepSeek published a paper outlining a more efficient approach to AI development, while shares of China’s Baidu advanced on reports that it is preparing to list its AI chip unit in an IPO*. Major indexes in Hong Kong, Korea, Taiwan, and Singapore all recorded fresh highs*. In the U.S., however, semiconductor gains were not enough to keep the Nasdaq in positive territory for the day. There were no major new economic data releases or corporate headlines. As previously announced, Berkshire Hathaway officially named Greg Abel as its new CEO, succeeding Warren Buffett. Meanwhile, silver extended its strong momentum after a standout year that saw precious metals reach new highs*, while oil prices declined following their steepest annual drop since 2020*.
   
• Optimism remains after a strong year - 2025 proved volatile but ultimately rewarding for investors, with global equity markets delivering robust gains. The TSX gained over 30% including dividends while the S&P 500 logged 39 new all‑time highs and returned 18%*. Looking ahead to 2026, we anticipate another year of positive returns supported by steady economic growth, modest fiscal stimulus, expected additional Fed easing, and rising corporate earnings. However, as we enter the fourth year of this bull market, investors should also remain mindful of potential risks, such as intermittent AI‑related setbacks and persistent inflation pressures. Following several years of double‑digit gains that have pushed valuations higher, 2026 will likely hinge on earnings growth doing more of the heavy lifting. While returns may moderate, we expect the bull market to continue. AI should remain a key driver, but we also anticipate broader market participation—both within tech and across other sectors and regions—supporting the case for a balanced and diversified portfolio approach.
   
• Busy week of data ahead - Next week brings a full slate of economic releases that will offer an updated read on both overall activity and labour‑market conditions. Key reports include U.S. ISM Manufacturing on Monday; Canada PMI on Tuesday; U.S. ADP private payrolls, ISM Services, JOLTS job openings, and factory orders on Wednesday; U.S. initial jobless claims and productivity/unit labor costs on Thursday; and the Canada and U.S. employment reports on Friday*. Recent jobs data has shown mixed signals, with U.S. unemployment rising to 4.6%, a four‑year high, while Canada's unemployment rate dipped to 6.5%*. Looking ahead, we see the most likely path as gradual stabilization, characterized by a continued low‑hiring, low‑firing environment. We expect monthly U.S. job gains to firm modestly into the 50,000–100,000 range, while a smaller labor supply—partly reflecting lower immigration—keeps unemployment near 4.5% in 2026. In Canada, we think we may be past the peak in unemployment as we expect private hiring to pick up, (hopefully) helped by an easing in trade policy uncertainty, and an accompanied improvement in Canadian growth.  

Angelo Kourkafas, CFA;
Investment Strategy

^{Sources: *Bloomberg}

The markets were closed on 1/1/2026.

Wednesday, 12/31/2025 p.m.

• Markets close 2025 on a soft note – Equity markets slipped on the final trading day of 2025, continuing a sluggish run over recent sessions as markets struggle for direction amid low liquidity and a quiet data calendar*. Still, major benchmarks booked impressive gains over 2025, with the S&P/TSX up 28%, the S&P 500 up 16%, the Nasdaq 20% higher, and the small-cap Russell 2000 index rising 11%*. Bond markets were also softer today, with the yield on the Canadian 10-year government bond up a couple of basis points (0.02%), consistent with a sell-off in U.S. bond markets*. Precious metals fell, particularly silver, on the back of announcements of higher margin requirements for these commodities after recent volatility*. Nevertheless, gold prices recorded a huge 64% gain in 2025, with silver up 145% over the year*. Elsewhere in commodity markets, oil prices at $57 per barrel are on track to close the year down a full 20%*.
• Few signs of U.S. labour-market distress – A slowdown in nonfarm payrolls this year, alongside a creep higher in U.S. unemployment rates, has prompted concerns that the labour market might be starting to crack. However, initial unemployment insurance claims data released this morning continue to show few signs of rising layoffs*. Instead, new claims were down to 199,000 over the preceding week, one of the lowest readings this year*. Granted, data can be choppy around the holiday season, but even the four-week moving average in claims, which should smooth through some of this noise, remains relatively low around 220,000*. Moreover, continuing claims, a measure of Americans receiving ongoing benefits, has also fallen in recent weeks*. These data should, in our view, help provide optimism that the U.S. labour market remains resilient moving into 2026.
• A busy New Year – The market has struggled for direction in recent sessions amid low liquidity around the holidays and a limited data and news calendar*. Headlines and volumes will likely quickly normalize as we move into 2026, in our view. Highlights next week include the eagerly anticipated December labour-market reports for both the U.S. and Canada, ISM and PMI survey data, and U.S. consumer sentiment. The Fed will likely be watching the U.S. labour-market figures particularly closely, as these provide the first clean read of these important data since before government shutdown disruptions started in October.  Minutes from the central bank's December meeting, released yesterday, highlighted that most FOMC members expect to lower interest rates next year, but some think policy should stay on hold for some time following the recent run of three consecutive rate cuts*. We would likely need to see a very weak labour report to push the Fed toward a rate cut as soon as January, in our view. We think the bar is even higher for further Bank of Canada easing, as we expect the central bank to leave rates on hold through 2026.

James McCann
Investment Strategy

^{Sources: *Bloomberg}

• Stocks finish mixed – Canadian stocks closed higher on Tuesday, with the TSX on pace for an annual gain of over 30% including dividends, while the S&P 500 finished near the flatline.* From a leadership perspective, most sectors of the S&P 500 finished the day flat to slightly lower, with energy and communication services among the top performers.* Overseas, Asian markets were mixed overnight while European markets traded mostly higher.* Bond yields ticked higher with the 10-year U.S. Treasury yield climbing to 4.12% while the 10-year GoC yield rose to 3.42%.* In commodity markets, precious metals added to strong year-to-date gains with silver gaining 8% and gold rising by 0.4%.
• Bond yield advantage over cash widens – Cash has narrowly outperformed Canadian investment-grade bonds in 2025, marking the fourth time in the past five years that cash has outperformed.* Despite 1% of interest-rate cuts from the Bank of Canada, longer-term bond yields trended higher in 2025, as resilient labour-market activity put upward pressure on yields, limiting returns for Canadian investment-grade bonds.*  However, Canadian investment-grade bonds currently yield over 1.3% more than cash, the highest since 2022.* With yield a key driver of fixed-income returns, we believe the yield advantage of Canadian investment-grade bonds over cash should pave the way for bonds to outperform cash over the coming years. For investors holding excess cash, consider reallocating to other asset classes—such as equities or other fixed-income investments—based on your risk tolerance, investment objectives and time horizon.
• U.S. housing market showing signs of stabilization – The U.S. Federal Housing Finance Agency (FHFA) home price index rose 0.4% in October, signaling potential stabilization after declines in four of the prior six months.* Similarly, the S&P Case-Shiller 20-city index increased 0.3%, exceeding expectations of 0.1% and marking the largest monthly gain since January.* This follows yesterday’s positive U.S. pending home sales report, which reached the highest level since February 2023.* U.S. mortgage rates, while still elevated compared to recent history, have eased from over 7% at the start of 2025 to roughly 6.5%, potentially bringing additional demand to the housing market.* Residential investment has weighed on U.S. economic growth, contracting in five of the past six quarters.* With U.S. mortgage rates off peak levels, an improvement in housing market activity and investment could provide an additional tailwind for U.S. economic growth in the year ahead.*
   

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}