Market Quote: Global Equity Markets Keep Rolling Despite Tariff Threat
Author: The editor's desk
February 5, 2025
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
Rainy Days and Mondays
North American equity markets have been rattled two Mondays in a row, but the S&P 500 Index and S&P/TSX Composite Index have rebounded each time and seem poised to reach all-time highs again.
While the U.S. administration’s decision to delay tariffs on Canada and Mexico is the main catalyst behind this week’s post-Monday surge, fourth quarter earnings season has no doubt been a contributing factor as well. This is particular true of results in the U.S., where the vast majority of S&P 500 companies have so far reported a positive earnings per share (EPS).
Ultimately, we believe U.S. and Canadian stocks have scope to climb higher from here, but investors should expect heightened volatility as the threat of U.S. tariffs ratchets up again, sometime later this month.
Euro Vision
European equity markets struggled to keep up with many of their global counterparts in 2024, but that hasn’t been the case so far this year, much like we forecast in our 2025 Outlook publication back in early December. In fact, the MSCI Europe Index is outperforming the MSCI All-Country World Index by almost three percentage points year-to-date (in U.S. dollar terms) and has a leg up on the S&P 500 Index as well.
We believe a favourable start to European earnings season may help fuel additional gains and assuage growing fears of a potential tariff war with the United States. While the new U.S. administration has been focused on Canada, Mexico and China in this regard, Europe may soon be in its crosshairs.
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