Insights & Resources

November was a testing period for equity investors as markets swung significantly.

A mid-month slump in US indices was precipitated in part by renewed concerns about the longer-term implications of the enormous capital spending by AI companies. After hitting a new year to date high near the end of October, the NASDAQ slid 7% by the third week of November before rebounding 5% in the final week, but not enough to avoid its first monthly loss since March. The S&P 500 Index also gyrated, and the market rebound was sparked in part by a soft jobs report on November 20^th that investors took as supportive of a potential December rate cut from the US Federal Reserve. Despite being caught in the US downdraft, Canadian equities pushed higher as the S&P TSX Composite Index ended November at record levels.

For the month, the S&P/TSX Composite Index rose 3.86%, the S&P 500 Index advanced 0.21%, the Nasdaq Index fell -1.45%, the MSCI World Index rose 0.25% and the MSCI EAFE Index gained 0.55%. In the U.K., the FTSE 100 Index inched up 0.38% while Germany’s DAX Index fell -0.51%. In Asia, Japan’s Nikkei 225 tumbled -4.11% and the MSCI China Index shed -2.46%.

In the US, the yield on the 10-year Treasury note drifted lower, continuing its directional trend in 2025 (yields fall as prices rise). In Canada, the FTSE Canada Universe Bond Index rose 0.27% for the month. Gold rose in November but ended the month below a record high set in October. Brent crude oil slipped -3.98%, continuing a year long decline.

Monthly Developments

• In Canada, Q3 GDP data released at the end of the month surprised to the upside at 2.6% on an annualized basis, but underlying details were mixed. The gain was driven by government spending, particularly military, and a significant decline in imports.
• Domestic activity painted a different picture as domestic demand and household consumption fell and business investment softened. Retail sales fell 0.7% in September, month-over-month, primarily due to lower auto and auto parts sales. A preliminary estimate for October GDP suggested more overall weakness, according to Statistics Canada.
• Q3 operating profit at Canadian corporations rose both from a year earlier and from Q2, according to Statistics Canada. Financials, manufacturing, mining and tourism all helped. Operating profit for the financial-services sector rose 6% from the previous quarter and climbed 1.9% in non-financial industries.
• Foreign investors bought $31.3 billion worth of Canadian securities in September, the largest monthly inflow since April 2024. Demand was primarily for debt securities. Canadians bought $22.1 billion in foreign securities in September, up from the $14.9 billion in August, with US stocks attracting $10.5 billion of that.
• Despite a tough trade environment, manufacturing sales hit their highest level in September since February 2025, up 3.3% (month over month) to $72.1 billion. Sales gains by sub sector were led by transportation equipment (+9.2%) and petroleum and coal (+5.3%). On a year-over-year basis total manufacturing sales rose 2.7% in September.
• Headline inflation slowed in October to 2.2%, year-over-year, driven by falling gas prices, and down from 2.4% in September. Measures of underlying inflation, however, accelerated due to higher prices for cellular services, home and auto insurance, and rents. The October inflation data is likely the last before the Bank of Canada’s next interest rate decision on Dec. 10
• October employment data was unexpectedly positive as the economy added 67,000 jobs, trimming the unemployment rate to 6.9%, according to Statistics Canada. Gains were led by part-time positions and private sector hires were in positive territory for the first time since June. Job gains across October and September have now outweighed sharp losses posted in August and July.
• In the US, November began with the ongoing government shutdown that delayed key data releases. The political impasse was resolved by the middle of the second week, but markets were left to sift a mix of private and delayed official data, with signals of stronger activity in the services sector over manufacturing but slowing overall economic momentum.
• Among the unofficial data was an ADP employment report showing an average loss of 13,500 private-sector jobs per week in the four weeks ending November 8th.
• On a broader front, total US nonfarm payroll employment ticked up by 119,000 in September but barely budged since April, according to the U.S. Bureau of Labor Statistics. The unemployment rate, at 4.4%, changed little in September. Employment trended up in health care, food and beverage services, and social assistance. Job losses were recorded in transportation, warehousing, and in the federal government.
• Retail sales in September came in below expectations, rising just 0.2%, and slowing sharply after months of acceleration.
• The Conference Board Index of US consumer confidence fell in November to 88.7 from 95.5, below expectations of 93.2. Similarly, the University of Michigan’s consumer sentiment index reading of 51.0 in November was the second lowest on record and just above the June 2022 low, as consumers continued to grapple with affordability challenges and weaker incomes.
• In the Eurozone, inflation data came in broadly as expected, with headline and core CPI remaining moderate in major economies. However, inflation in Germany, Europe’s largest economy, rose to 2.6% in November from 2.3% in October, higher than expected.
• German exports increased by 1.4% in September, exceeding economists’ expectations of a 0.5% rise, with exports to the US up 12%, the first increase after five months of decline.
• In the UK, headline inflation softened to 3.6% in October, annualized, down from 3.8% in September. Food prices continued to strengthen, but weaker services inflation offset some of this.
• The UK budget, which included various tax hikes, was met with a muted market reaction. Markets were largely steady as investors weighed the policy mix against still-elevated borrowing needs.
• China’s factory activity as measured by a purchasing managers index declined for the eighth month in a row in November. Another index focused on non-manufacturing business activity dropped to 49.5 from 50.1 in October. A reading below 50 indicates contraction and is the first below 50 in three years.
• Japan’s Q3 GDP fell by 0.4%, quarter over quarter, on lower exports and residential investment.

What can we expect now?

Stock markets again overcame periods of volatility to end November on a positive note, except for the tech heavy NASDAQ. The S&P/TSX Composite Index continued its run of outperformance, topping major US stock indices and the MSCI World Index on a 3-month, year to date, 1-year, 3-year and 5-year basis as of the end of November. Heading into December, equity markets are poised to end 2025 with solid gains despite signs of economic weakness, particularly in Canada, where growth has flagged under the weight of unresolved US trade and tariff issues.

US and Canadian consumers have grown more cautious, and the important December retail period will be scrutinized for signs of underlying resilience or softness. Corporate profits have held up in both the US and Canada but there is an increasing gap between market performance and consumer perceptions of the economy.

As 2025 winds down we welcome, as always, your thoughts and questions about your personal investment priorities for the coming year.