North American equity markets experienced heavy volatility last week, pushed around by a geopolitical standoff that saw the TSX Composite and S&P 500 swing sharply. The headline catalyst was President Trump’s surprise announcement of a new 10% tariff on several European nations to pressure negotiations for the purchase of Greenland. While the EU threatened US$108 billion in retaliatory tariffs, the standoff de-escalated mid-week after a framework for a future deal was reached involving access to mineral rights and collaboration on the "Golden Dome" defence system. This geopolitical rollercoaster drove demand for safe-haven assets, sending gold and silver prices to record highs, which helped the materials sector lead the TSX and drive the index to a record high. Similarly, the energy sector led the S&P 500, with oil prices climbing on concerns over supply disruptions as the Iran situation escalated and natural gas prices climbed over 50% in response to a blast of arctic air. Investors paid attention to the World Economic Forum, which took place in Davos, Switzerland last week. The event brought a number of comments from world leaders that drew the attention of many investors.

Volatility was further fuelled by spillover from a pronounced selloff in Japanese government bonds following Japan’s Prime Minister Sanae Takaichi’s announcement of snap elections, which also sent the 30- and 40-year Japanese government bond yields to record highs before pulling back. An election victory raises the chances of a stimulus push that already has investors on edge due to Japan’s rising fiscal pressures and massive debt loads. The concern is that the US relies on foreign capital to finance its deficit, and with Japan holding about US$1.2 trillion in US Treasuries, the risk of Japanese investors repatriating funds could put selling pressure on US bonds and threaten equity valuations with a higher cost of capital. The market reaction to Japan’s fiscal concerns also drew parallels to the US fiscal outlook, as the country continues to run budget deficits while expanding its government debt. Some investors expressed concern over similar rising debt in the US.

In company news, Netflix shares fell 2% despite beating earnings estimates as worries grew about slowing subscriber growth. Subscriber additions in 2025 decelerated significantly compared to 2024, shedding light on the company’s decision to amend its US$82.7 billion offer for Warner Bros. Discovery to an all-cash bid. To help fund the massive transaction, management announced a pause on share repurchases. While the final season of Stranger Things drove a 10% jump in December viewership, the market remained focused on the capital intensity of the acquisition battle and the company's maturing growth profile.

Canadian retailers made headlines this week for a variety of reasons. Aritzia’s founding shareholder and executive chair, Brian Hill, sold 1.5 million shares of his shares to raise $200 million (but still holds 15.9% of Aritzia’s outstanding shares). Lululemon made headlines after a revealing product release. The company halted sales of its “Get Low” leggings after customer complaints over the transparency of the fabric when stretched. The company later continued the product—with new explicit disclaimers on them. Shares of both Artizia and Lululemon declined during the week.

BHP Group provided an update on its Jansen Potash project in Saskatchewan. The project has endured a number of cost escalations. When the project was originally approved in August of 2021, it was expected to cost US$5.7 billion. Cost estimates have now increased to US$8.4 billion. With its North American headquarters located in Saskatoon, BHP is one of the largest global producers of copper, iron ore, potash and nickel.