Quarterly market outlook - 2nd Quarter, 2025
Our investment strategists provide the Edward Jones perspective on the latest economic activity and what it may mean for investors.
The Quarterly Market Outlook provides investors with our perspective on recent activity in the capital markets. The Edward Jones Investment Policy Committee offers its viewpoints on the U.S. economy, equities, the bond market, international markets and asset classes, as well as a special topic of interest to investors each quarter.
These aren’t short-term predictions. Rather, this is Edward Jones’ perspective on market and economic topics designed to help you make decisions affecting your long-term financial strategy. As you read through each topic, you'll find specific actions you can discuss with your financial advisor.
Looking back at the first quarter
Diversification showed its merit in Q1, with Canadian and overseas equities along with fixed-income investments finishing higher despite volatility in U.S. stocks.
Economic outlook
Canada was exempt from the U.S. reciprocal tariffs but will still be subject to the 25% tariffs on autos, steel & aluminum, and all non-USMCA compliant goods, however non-CUSMA compliant energy and potash have a 10% tariff. While this is a better scenario that initially feared, U.S. trade policy still poses risk to the Canadian economy and is a key reason behind the elevated equity market volatility that may persist through the second quarter.
Equity outlook
The Canadian stock market held up better than the U.S. in the first quarter of the year, with the Canadian TSX up about 1%. Underneath the surface, the driver of Canadian equities was largely the materials sector, which was up nearly 20%, given the positive performance of gold miners in the first quarter.
Fixed-income outlook
Solid fixed-income performance could continue as yields appear poised to remain range-bound, especially if the economy cools further.
International outlook
After a long stretch of underperformance, overseas equities achieved their best yearly start (relative to U.S. equities) in the past 35 years. Diverging fiscal outlooks, a rotation to cheaper markets and a weaker dollar boosted returns. U.S. markets may retake the lead if sentiment around mega-cap tech stocks improves, but as Q1 showcased, overseas stocks play an important role in diversifying portfolios.
Higher policy uncertainty and implications
While Canada was not included in the U.S. administration's reciprocal tariff announcement on April 2nd, the country still faces 25% tariffs on autos, steel, and aluminum, in addition to 10% tariffs on energy and potash exports. Meanwhile, Prime Minister Carney has responded with tariffs of 25% on U.S. auto imports to Canada. This is in addition to existing 25% tariffs on $59.8 billion worth of U.S. goods.
Strategic asset allocation guidance
Our Strategic Asset Allocation represents our view of balanced diversification for the fixed income and equity portions of a well-diversified portfolio based on our outlook for the economy and markets over the next 30 years.
Quarterly market outlook - Full report from Edward Jones
Download the entire quarterly market outlook report here.
Important information:
This content is provided as general information only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation.
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