Current Market Outlook

Markets remain stable despite Middle East tensions. While a ceasefire between the U.S. and Iran is holding, markets have already factored in an optimistic resolution scenario. The good news: the economy is proving resilient, with strong corporate earnings and less dependence on oil than in the past.

 What's Supporting Markets

• Strong corporate earnings and healthy profit margins
• AI investment paying off – major tech companies are showing real earnings growth, not just spending
• Consumers adapting well to higher energy costs
• Semiconductor demand remains robust, signaling continued AI infrastructure growth

 Key Risks to Watch

The biggest concern isn't today—it's what happens if the situation drags on. Oil supply buffers (inventory reserves, strategic releases) are gradually being used up. If these run out before the situation resolves, energy prices could increasingly hurt economic activity.

Interest Rates & Central Banks

Both the Bank of Canada and Federal Reserve are holding rates steady for now. Investors no longer expect rate cuts soon. This is partly due to geopolitical uncertainty and partly because inflation expectations remain stable—giving policymakers room to wait and see.

Note: The Fed will have new leadership (Kevin Warsh is being confirmed as the new chair), which could lead to subtle shifts in policy communication, though the core approach should remain consistent.

Bottom Line

Stay focused on the long term. Markets have priced in a quick resolution, which makes them sensitive to delays. Maintain a diversified portfolio and keep perspective as headlines continue to evolve

Enjoy your weekend.

Tim