Canadian investors could be forgiven for suffering from whiplash this week as global markets swung between sharp falls and gains.
Hopes that a reset in relations with China could boost Canadian exports for agricultural products and expand the market for Chinese EVs were quickly forgotten as a rout in Japanese government bonds bled over into U.S. Treasuries. Sudden fears about a U.S. takeover of Greenland dealt a further blow to destabilized global markets before dissipating as quickly as they appeared.
After plunging more than 2 per cent on Tuesday, the S&P 500 index bounced back the next day after U.S. President Donald Trump appeared to rule out taking Greenland by force. By the close of trade on Thursday, the S&P was down less than 0.4 per cent for the week, while the TSX had slipped just 0.1 per cent. Analysts pointed to lingering high gold prices as one of the few remaining signs of jangled investor nerves.
The lesson for Canadians, experienced investors say, is not to panic, but instead focus on the fundamentals of their portfolio.
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“Traders need to look at this information moment by moment. Investors should probably be trying to look past some of [it],” said John Pitfield, relationship manager at Claret Asset Management in Toronto. The biggest winners, he said, are likely to be portfolios that use diversification to reduce their overall risk rather than trying to jump on short-term bets.
“If somebody decides they’re going to go all in on canola … I think it’s a fool’s errand because the guy who is running a canola trading business has a much better knowledge base,” he said.
Mr. Pitfield suggested a more fundamentals-driven approach, noting the dominance of banks and natural resources companies in the Canadian market had helped to support strong domestic equity gains over the past year. He added that investors should consider their portfolio returns over longer time frames and consider reducing their risk exposure now.
A December analysis by Toronto-based Tacita Capital calculated the total return of Canadian equities at 30.94 per cent in 2025, far higher than a 16.67-per-cent annualized return over a five-year period.
To be sure, major geopolitical events can help drive opportunities for those plugged into the daily news cycle, whether in Canada or overseas. Analysts Deng Shaorui, Li Xin, Bai Xuyu and Xue Junyuan at Guangzhou, China-based Huatai Futures said in a research note that the Jan. 7 announcement of Prime Minister Mark Carney’s visit to China prompted “relatively big fluctuations” in Chinese vegetable oil markets as traders sought to capitalize on expectations of adjustments to tariffs.
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Chinese electric-vehicle firms, another focus of what Ottawa has termed a “new strategic partnership” with Beijing, also received a jolt to their share prices from Mr. Carney’s trip. Xu Yu, senior new energy vehicles analyst at Shanghai-based Orient Securities, wrote in a note to clients on the weekend that the deal constituted a “major policy change” that would benefit Chinese EV exports.
A subindex tracking automobile manufacturers listed on the Shanghai and Shenzhen stock exchanges jumped more than 1.5 per cent early this week, though those gains were fleeting. By Thursday, the subindex had given up nearly all of its gains for the week.
Jim Gilliland, chief executive officer and head of fixed income at Leith Wheeler Investment Counsel Ltd. in Vancouver, said the impact of the signal sent by Canada’s agreement with China would potentially be larger than any direct effects of the deal itself. He added that increasing capital spending and infrastructure commitments in Western Canada aimed at helping boost exports created a “more positive” long-term picture.
Even against a backdrop of rising global uncertainty, Mr. Gilliland noted that capital markets had been “surprisingly well-behaved” with low overall equity market volatility, steady price-to-earnings ratios and stable rates. Investors would do well not to overreact to front-page headlines, he said.
“The Page 1 stories are probably fully discounted in the price,” he said. “It’s the stories that are on Page 17, that will make their way up to Page 1 over time, that are the ones that potentially have impact.”