U.S. President Donald Trump shakes hands with Kevin Warsh at the White House on May 22.Anna Moneymaker/Getty Images
SpaceX took off like a rocket in its debut on Friday, and this week investors will see if the gains can continue. Plus, there’s another debut to watch – this time at the U.S. Federal Reserve.
Here are five things to know this week:
Rocket man: The S&P 500 finished in the green for the week, but it would be an overstatement to say it was because of SpaceX’s initial public offering. While the market cheered Elon Musk’s US$2-trillion company, the best performers over the past week were decidedly more pedestrian: tech underperformed (excluding semiconductors), while materials, consumer staples (J.M. Smucker and Target Corp. are up 10 per cent) and financials outperformed. For all the excitement about SpaceX’s historic market accomplishment in the U.S. (and it is), the Canadian markets did better last week even with oil prices falling. It’s a sign investors wanted their vegetables along with their dessert.
Space stocks slump as blistering rally cools after SpaceX market debut
New guy: The U.S. Federal Reserve will make its first interest rate decision under Chair Kevin Warsh. Hand-picked by U.S. President Donald Trump ostensibly to deliver rate cuts, he faces a market that is currently pricing in a rate hike. That’s partly because of the multi-month war in Iran, which drove headline inflation to the highest level in three years. He inherits a divided Federal Reserve board with one member wanting a rate cut while three advocated for dropping the easing bias. To add to the drama, Mr. Warsh will lead his first Fed meeting while his predecessor, Jerome Powell, remains on the board. Mr. Warsh will face reporters in a press conference for the first time, which will be interesting considering he has complained about excessive communication from the Fed. Mr. Warsh said at the Senate banking committee in April that he doesn’t believe in forward guidance. “I don’t believe that I should be previewing for you what a future decision might be,” he said in his testimony. SpaceX and the Iran war may have pushed central bank policy down on investors’ priority list, but a more opaque Fed could inject some uncertainty into the market.
Euro trip: The G7 leaders are meeting in Evian in the French Alps for their annual summit – an idyllic backdrop to talk about chaotic geopolitical realities. Crude prices responded to reports of the U.S. and Iran getting close to a peace deal, falling 7 per cent last week. Energy stocks were resilient, flat on the week. A resolution to the Iran war would come as a relief to markets but especially to the eurozone, where last week the European Central Bank became the first in the G7 to hike rates following the energy price shock.
Kicking and screaming: Japan is expected to become the second G7 country to raise rates, following the inflationary shock from the Iran war – but the decision has been more than a year in the making. Japan has been very slowly raising rates since 2024. The economy has been slow for a myriad of reasons: the country’s massive debt burden, political pressure and a weaker yen. The question now is whether the yen has become too weak, trading at a 30-year low versus the U.S. dollar. “Not hiking will throw the BoJ’s credibility out the window and may weaken the currency further,” wrote Jennifer Lee, senior economist at BMO Capital Markets, referring to Bank of Japan. “Considering that Japan is an energy importer, that would add more pressure on inflation.”
Clean-up, aisle 2: Empire is one of the only companies reporting next week. Shares of the grocer and parent company of Sobey’s and Farm Boy have struggled, underperforming the index and down 3 per cent over the past year on a total return basis. Same-store sales growth is expected to be barely above 1 per cent – the lowest since the end of 2024 and lower than the latest reading of food inflation.
In the Money with Amber Kanwar is Canada’s top investing podcast. New episodes out Tuesday and Thursday. Subscribe at www.inthemoneypod.com.