Global Asset Allocation Team Market Update – October 2025

Global equity markets breached new highs in September. The MSCI All Country World rose 3.5%. The S&P 500 advanced 3.5% to cross the 6700-mark on the back of solid performance in the so-called “Magnificent 7” group of stocks (+9.0%). The S&P/TSX jumped 5.1% and crossed the 30,000-mark thanks to outperformance in the heavyweight energy (+4.8%), financials (+4.4%), and materials (+18.7%) sectors. Elsewhere, the MSCI EAFE gained 1.6%, while the MSCI gauge of emerging market stocks surged 7.0% amid mounting demand for shares tied to artificial intelligence.

Fixed income markets also generated positive results. Yield curves flattened in a bearish fashion across both the United States and Canada, with longer-term yields declining more than their shorter-term counterparts. In the United States, the Supreme Court’s decision regarding Trump’s attempt to fire FOMC member Lisa Cook took some of the term premium out of the yield curve since it confirmed that a Presidential takeover of the Federal Reserve will not be that easy. Meanwhile, expectations for monetary policy were broadly priced-in – resulting in a smaller downward move in the short-end of the curve. In Canada, bond yields saw more profound downward moves following an uninspiring jobs report that prompted the Bank of Canada to step off the sidelines after holding rates steady for the past three meetings. For the month, the Bloomberg US Aggregate Bond Index rose 1.1%, while the FTSE Canada Bond Universe gained 1.9%.

The US dollar ended September virtually unchanged. In a case of two halves, there was consistent selling into the Federal Reserve decision as expectations for a rate cut built. However, there was a relief rally following the decision as the reduction was seen as a foregone conclusion.

Finally, oil stumbled following reports that OPEC+ are preparing to release additional idled capacity that threatens to amplify the supply glut in the market. By contrast, gold breached a new record high as the prospect of rate cuts and the latest decline in treasury yields increased the allure of the non-interest-bearing precious metal.

[…]