Markets
AI, tariffs and the Magnificent Seven: 2025 in review
By Jason Crumley 20 November 2025 4 min read
As we approach the final weeks of 2025 and reflect back on the market, the investment universe had a remarkable year with the Magnificent Seven, artificial intelligence and tariffs dominating headlines. Many of the themes we outlined in our Key themes investors should follow in 2025 article early in the year received significant attention throughout the year and had a major impact on markets.
In this article, we revisit these themes to show what transpired and also evaluate how some of the investment landscape has changed throughout the year—like international markets quietly outperforming many major US benchmark indices while attention was on the Magnificent Seven and US markets.
The S&P 500 lagged other indices in 2025
Here are six themes we said to watch in 2025, and what transpired during the year.
1. The equity rally: What could slow the seemingly unstoppable equity market?
Artificial intelligence remains a key focus for investors, driving strong interest throughout 2025. Earnings growth for the Magnificent Seven group of companies continues to far exceed those of the remaining S&P 500 companies. A Bloomberg survey of analysts is forecasting 18% earnings per share growth for the Magnificent Seven companies in 2026. While many factors can influence share prices, the Magnificent Seven’s ability to meet or exceed these expectations will be an important factor for investors to consider along with what is an appropriate valuation for these investments. Another important factor to consider is concentration risk within your investment portfolio. With the strong outperformance of the Magnificent Seven, these investments represent a greater portion of many portfolios. It is important to be aware of how concentration has evolved in your portfolio and what can be done to mitigate this risk. Read more about this in our article Should I invest at all-time highs?
2. The Trump effect: From tariffs to a 51st state
Market volatility increased significantly in 2025. The global trade landscape underwent significant change over the last year as President Trump used his social media account to communicate sweeping tariff-related policy changes. These changes shook foreign countries, including Canada, and our expectation of increased volatility became a reality. The Chicago Board of Options Exchange’s volatility index (VIX) spiked to its third highest level in the last 20 years. Now with tariff-related volatility largely behind us, investors are digging into what the impact is to companies in Canada, the US and around the world.
Chicago Mercantile Exchange Volatility Index
3. Oil: OPEC+, global supply and expanding market opportunities for Western Canada
Oil prices declined in 2025 with a year-to-date average of US$66 per barrel in 2025 compared to US$76 per barrel in 2024. The oversupply scenario we previously discussed continued throughout the year with the International Energy Agency (IEA) now forecasting a four million barrel per day oversupply scenario in 2026. Western Canadian oil production continues to grow and benefit from pipeline expansion as new opportunities for western Canadian egress are explored. While additional transportation options are positive for western Canadian oil, the global oversupply situation and geopolitical risk will continue to impact oil prices.
4. Bonds: Inflation, rates and the impact on the yield curve
The Bank of Canada and the US Federal Reserve continued with the rate cuts that started in late 2024. This has pushed short-term investment yields down while pushing those same bond prices higher due to the inverse relationship between bond yields and prices. We explore the recent rate cuts in Canada and the US in What rate cuts mean for your bond investments.
Declining short term rates steepened yield curves
5. Geopolitical risk: Ukraine, the Middle East and other areas of concern
While recognizing the horrific impact conflict has on the lives of those impacted, it also ripples through the economy, which in turn, impacts companies and investors. The war in Ukraine continues despite political effort to end the conflict while Middle East tension continues despite the ceasefire between Israel and Gaza. While geopolitical instability tends to increase investment volatility, diversification is a great way to protect your portfolio from the unpredictability of war.
6. The China effect: How will a potential slowdown in the world's second largest economy affect others?
Our attention on the Chinese economy at the beginning of the year centred around fallout from several major real estate defaults. While this should continue to receive attention, a larger structural shift continues as the International Monetary Fund expects annual growth rates to continue to slow in the coming years. A continued slowdown in China will have an impact on global markets.
Conclusion
Throughout 2025, investors were presented with a complex market landscape, with many global indices outperforming their long-term average. While current economic growth and declining interest rates provide a strong foundation heading into 2026, we should always be aware of risks to investment performance. The unpredictable nature of the new US administration, potential oil oversupply, and lofty equity valuations are all things investors should be aware of while maintaining focus on your goals.
Even with the strong performance witnessed in 2025, prudent investors should maintain a diversified portfolio, carefully assess risk tolerance, and be aware of these and other changing market conditions.
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