Data and opinions as of April 30th, 2025
April 2025 was marked by a fragile pause in escalating U.S. tariff policies, a reassessment of the U.S. dollar’s dominance, and a transformative election in Canada. The 90-day tariff suspension, announced after Liberation Day celebrations, provided temporary relief to global markets but failed to dispel concerns over trade tensions and slowing economic growth. Meanwhile, the U.S. dollar faced pressure as the yields vs. dollar spread diverged, and investors questioned its safe-haven status. In Canada, Prime Minister Mark Carney’s victory and ambitious growth plan sparked optimism for productivity-driven prosperity, though tariff risks loom large. Central banks, including the U.S. Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE), and Bank of Canada (BoC), remained focused on balancing inflation and growth, with divergent policies reflecting regional challenges.
Tariff uncertainty reshapes global growth: The temporary 90-day pause on U.S. tariffs, offers a brief reprieve but does not alter the broader trajectory of slowing global growth. Bottom line: Investors should remain cautious, prioritizing diversified portfolios to navigate heightened trade and policy uncertainty.
U.S. dollar under scrutiny: The U.S. dollar’s strength is wavering amid tariff pauses and shifting yield spreads, with implications for global currency markets and asset allocation. Bottom line: Currency volatility underscores the need for hedged exposures and selective safe-haven diversifiers.
Canada’s policy pivot: Canada’s new leadership under Prime Minister Mark Carney signals a bold growth agenda focused on AI, clean energy, and housing, despite tariff-related risks. Bottom line: Canadian equities may see renewed interest, particularly in technology and renewable energy sectors, as long-term productivity investments take shape.
‒ NEI Asset Allocation team
Monetary Fund’s (IMF) April 2025 World Economic Outlook projects global growth at 2.8% in 2025, down 0.8 percentage points from its January forecasts. This is driven by tariff impacts and supply chain disruptions. The 90-day tariff pause temporarily halted most U.S. tariffs while maintaining elevated duties on China, offering markets a brief respite. However, the IMF warns that sustained trade tensions could further depress growth, with global trade growth projected at just 1.7% in 2025.
Consumer and business confidence indicators reflected caution, while market-based indicators like breakeven inflation rates edged higher. Tariff-related supply shocks continue to pressure prices, particularly in energy and intermediate goods, complicating central bank efforts to normalize monetary policy.
Central bank responses varied. The Fed signaled vigilance on inflation, pausing rate cuts; the ECB and BoE maintained cautious stances, citing trade risks; and the BoC, under Canada’s new economic context, balanced growth stimulus with inflation concerns. The BoC warned that prolonged U.S. tariffs could push Canadian inflation above 3% by mid-2026, risking a deep recession.
Bottom line: The tariff pause offers a tactical window for investors to reassess exposures. Diversification across regions and asset classes, including inflation-hedging strategies, remains critical amid persistent downside risks..
Gold extended its strong year-to-date performance in March, breaking through key technical resistance levels and posting double-digit gains. A combination of factors contributed to this surge: increasing inflation expectations, rising geopolitical risks, and sustained central bank purchases globally. Notably, several emerging market central banks added to reserves, citing a desire for diversification away from U.S. dollar-denominated assets.
Gold’s traditional role as a safe haven asset has also been amplified in today’s environment. Retail and institutional flows into gold ETFs rose significantly over the month, with investors seeking protection against both macroeconomic volatility and equity market pullbacks.
In addition, as real yields began to level off, the opportunity cost of holding gold became less punitive, further enhancing its relative attractiveness. With uncertainty looming over both inflation and monetary policy, gold appears to be regaining its strategic allure.
Bottom line: With a backdrop of sticky inflation, geopolitical volatility, and robust central bank demand, gold remains a valuable diversifier and a potential outperformer in multi-asset portfolios.
European markets outperformed in March, with Germany’s landmark €1 trillion defense budget announcement acting as a key catalyst. This unprecedented fiscal commitment marks a major policy shift, signaling a stronger, more independent European security posture. The move is widely seen as a response to growing geopolitical tensions and a desire to reduce dependency on U.S. defense guarantees.
Equity markets responded positively. Germany’s DAX index rallied sharply, lifting broader European equities as investors interpreted the budget as both a near-term stimulus and a long-term structural shift. Sectors likely to benefit include defense, aerospace, infrastructure, and industrials.
Source: Bloomberg
Canada’s equity markets outperformed in April, driven by Prime Minister Mark Carney’s election victory and a forward-looking growth plan. Carney’s platform, emphasizing AI infrastructure, clean energy, and housing, aims to address Canada’s productivity lag, which has seen Canadian workers trail U.S. counterparts by 33% in output efficiency. His “Made in Canada” strategy focuses on four pillars: smarter (AI-driven productivity), cleaner (integrated energy leadership), more resilient (economic diversification), and fairer (inclusive prosperity).
The TSX index rallied, with technology, renewable energy, and real estate sectors leading gains. Carney’s commitment to 500,000 new homes annually, prioritizing affordable prefabricated units, boosted construction and banking stocks. His trade diversification strategy, targeting Europe and Asia to reduce reliance on the U.S. (75% of exports), resonated with investors, though tariff uncertainty remains a headwind.
Carney’s policies include fiscal stimulus via AI R&D, clean energy projects, and STEM education, potentially limiting BoC rate cuts. NEI’s engagement with energy companies on methane emissions and responsible mining aligns with Carney’s sustainability focus, supporting long-term investor value. However, the BoC flagged tariff risks, projecting a potential recession if U.S. tariffs persist.
Bottom line: Canada’s policy shift offers opportunities in technology, clean energy, and housing-related equities. Investors should balance optimism with caution, favoring diversified portfolios to mitigate tariff and inflation risks.
Data and opinions as of April 30, 2025.
Aviso Wealth Inc. (“Aviso”) is the parent company of Aviso Financial Inc. (“AFI”) and Northwest & Ethical Investments L.P. (“NEI”). Aviso and Aviso Wealth are registered trademarks owned by Aviso Wealth Inc. NEI Investments is a registered trademark of NEI. Any use by AFI or NEI of an Aviso trade name or trademark is made with the consent and/or license of Aviso Wealth Inc. Aviso is a wholly-owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and The CUMIS Group Limited
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