Markets
We hope you are enjoying summer and the recent reprieve from humidity.
As of writing on August 1, 2025, we’re reviewing market conditions and positioning portfolios for what lies ahead.
Top of mind is the US economy and President Trump’s trade war. Tariffs now apply to major exporters: 30% on Mexico and China, 35% on Canada, and 15% on the EU, Japan, South Korea, and others starting August 7.[i] For Canada, only 10–20% of exports are affected due to CUSMA compliance. [ii] Despite these measures, recovering US consumption is keeping import demand resilient.[iii]
Globally, economic growth is mixed but generally positive. The EU is accelerating,[iv] while the US and Canada are slowing but still expanding. [v] [vi]Inflation remains stubborn, prompting both the US Federal Reserve and Bank of Canada to hold rates steady—no surprises there.[vii] [viii] Underlying these figures are shifts in trade patterns, consumer behavior, and debate over the future of American market dominance.
US markets hit new highs, helped by the pro-growth “Big Beautiful Bill,” eased banking regulations, and strong earnings. While we maintain US exposure, we’re shifting new investments toward mid-cap equities to reduce valuation risk in large/mega-caps. We’re also increasing allocations to Europe and Japan, where valuations are attractive and policy tailwinds—like EU fiscal stimulus and corporate reforms in Japan—offer compelling upside.[ix][x]
The remainder of Q3 will be critical in shaping global economic direction. While markets have rebounded strongly from early 2025 setbacks, we remain focused on managing risks and pursuing clear opportunities.
Sincerely,
The Momentum Wealth Team
References
[i] Trump tariffs list: See all the tariffs by country
[ii] Trump tariffs: What goods are under CUSMA compliance?
[iii] U.S. Bureau of Economic Analysis (BEA)
[iv] GDP up by 0.1% in the euro area and by 0.2% in the EU – Euro indicators – Eurostat
[v]Rebound in US economic growth in second quarter masks underlying slowing trend | Reuters
[vi] Canada’s economy ‘treading water’ after GDP dropped for 2nd straight month – National | Globalnews.ca
[vii] Bank of Canada holds policy rate at 2¾% – Bank of Canada
[viii] U.S. Federal Reserve leaves interest rates unchanged as it faces political pressure – The Globe and Mail
[ix] Value Vantage Point: As Japanese companies change, investment opportunities bloom | Franklin Templeton
[x] A new dawn of fiscal stimulus in Europe | Franklin Templeton
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