Making financial news make sense
Welcome to the Carillon’s “Finance with Pall,” a news finance column covering important economic and financial news from Canada and around the world, focusing on explaining what that news means for students. From tuition costs to job markets, we’ll break down how these changes affect you, making finance easy to understand and relevant to your life. If you have any topic requests or want me to highlight a stock price – shoot me an email at pall@carillonregina.com.
Disclaimer: The information in this column is intended for educational purposes and is not financial advice. For personalized financial guidance, please consult a licensed professional.
This week, we’ll be addressing big news from last week. Trudeau’s resignation has far-reaching implications in both the Canadian and global economies. It has had interesting and noteworthy impacts on markets wide and far.
News of the week: Canadian prime Minister Justin Trudeau resigned from the position of the Liberal Party Leader and the Prime Minister role after serving nearly a decade in the office. This was followed by the recent resignation of the Finance Minister Chrystia Freeland in December 2024, due to what BBC News explained were “disagreements with Prime Minister Justin Trudeau on how to respond to incoming President Donald Trump’s threat of tariffs.”
The ensuing political instability has introduced significant economic uncertainty in Canada. The Liberal Party is now in the process of selecting a new leader, with potential candidates including Mark Carney, former Bank of England and Bank of Canada governor, Anita Anand, Minister of Transport of Canada, and others. According to Reuters, after Trudeau’s resignation was announced, the TSX fell, but the loonie reached a near three-week high. This news counterbalanced the Bank of Canada’s rate cuts, which was intended to fuel the economy in 2025 and re-introduce some stability.
Impact: Canada Economic Policy Uncertainty Index surged to 650, its highest since May 2020. The surge in the index reflects the general instability in the economy and a decline in confidence of investors and people overall. Other pressures like the controversial carbon tax and increased immigration would continue to be a problem. This political instability would lead to reduced spending and slower economic growth due to lower consumer confidence.
It is important to note that this is the general sentiment around the country, but also that there was a contrary impact on the overall market following Trudeau’s announcement. The stock market closed at 0.29 per cent at 24,999.79 nearing its all-time high.
The energy industry had a positive impact with the S&P/TSX capped Energy Index rising nearly two per cent. This uptick attributed to investor sentiment that Trudeau’s resignation might lead to a favourable economy and might revive its stability.
Despite some positive impact, the market remains cautious due to the uncertainty surrounding future leadership and policy directions. Investors are particularly attentive to any upcoming economic data releases and changes, especially political shifts in fiscal and trade policies that could influence and affect market dynamics.
The forward strategy leans more into how much clarification is there from a leadership standpoint, with respect to the new leader and the outcome of the 2025 Federal election, particularly how that will impact the fiscal relationship between Canada and the US and what tariffs will look like.
