Market Update October 2025
This past month brought continued strength across equities, a sharp rally in gold, and meaningful shifts in interest rate policy on both sides of the border. Here’s how markets performed and how we’ve positioned portfolios in response.
How Did the Markets Perform in September?
Despite ongoing political noise and mixed economic data, markets posted robust gains.
S&P/TSX: ↑ 5.4% - Materials dominated with +18.9%, while small-caps gained +8.9% and are now up 20.9% for the quarter. Industrials and Communication Services were the only negative sectors.
S&P 500: ↑ 3.6% - Driven by large-cap technology stocks. U.S. small-caps rose +3.1%, supported by expectations that the Federal Reserve will lower interest rates to support growth.
Gold: ↑ 11.4% - A surge as investors continue to hedge against government deficit spending and global uncertainty.
Oil: ↓ 1.8% - Prices softened in September, though they remain positive year-to-date.
Interest Rates, Inflation, and Employment
Interest Rates:
Bank of Canada: Cut its key rate by 25 bps to 2.50%, the first move lower since March. Markets are pricing in a 55% chance of another cut at the October 29th meeting.
U.S. Federal Reserve: Cut rates by 25 bps on September 17th, bringing the target to 4.0%–4.25%. This was the first U.S. cut of 2025, driven by weakening labour data. The Fed signalled two more cuts could follow before year-end.
Inflation:
Canada: CPI rose to 1.9% in August (from 1.7%). Gasoline prices fell -12.7% year-over-year, while meat prices rose +7.2%. Analysts expect the Bank of Canada to maintain a bias toward further cuts given softer growth and rising unemployment.
U.S.: CPI increased to 2.9% year-over-year, with Core CPI still elevated. The U.S. government shutdown may delay the next inflation release.
Unemployment:
Canada: Unemployment rose to 7.1% (from 6.9%), the highest in four years. Youth unemployment reached 14.5%, the highest since the early 2010s.
U.S.: Estimated at 4.3%. The official report was delayed by the government shutdown, but labour market softness persists.
What Are We Seeing in the Markets?
Fixed Income: Benefitted from central banks lowering interest rates. Canadian bonds gained +1.4% for the quarter, with long-term bonds up +3.5%.
Equities: Global stocks extended gains, with Emerging Markets up +7.2% and Canada leading developed markets. The TSX rose +12.5% for the quarter, driven by cyclical sectors (Materials, Energy, Finance).
U.S. Equities: Sector gains were concentrated in Information Technology (+7.2%), Communication Services (+5.6%), and Consumer Discretionary (+3.2%).
Commodities & FX: Gold posted another strong rally, oil declined modestly, and the U.S. dollar strengthened slightly after earlier weakness.
Portfolio Adjustments in September
We executed two trades this month, totalling a maximum of 2% of portfolios:
Sept 12: Purchased 1% Dynamic Precious Metals (DYN1646) and 2% Vanguard Emerging Markets (VEE), funded by a 3% reduction in cash (DYN6004).
Sept 25: Added 1% DYN1646, funded by a further 1% reduction in cash.
Since purchase:
DYN1646: +11%
VEE: +2.7%
These adjustments reflect our constructive view on gold and emerging markets following the Bank of Canada and Fed’s interest rate cuts.
Bottom Line
The outlook for growth remains positive, and the risk of recession has eased despite lingering uncertainty. While volatility is likely to continue in Q4, the broader uptrend remains intact, supported by lower rates, ongoing policy support, and resilient economic expansion.
Our portfolios remain positioned for growth, with flexibility to adjust as conditions change. For now, we are holding steady.
If you’d like to discuss these updates or how they relate to your portfolio, please reach out. We’re always here for you.
