Global equity markets climbed higher in August, but not without challenges to overcome. From rising bond yields to escalating wars\u2014both in the traditional and commercial sense of the word\u2014investor attention has been asked to be everywhere all at once.<\/p>\n\n\n\n
Analysts\u2014ourselves included\u2014have noted that the immense capital costs behind the AI buildout must generate results that investors can rationalize. Those expectations, unspoken as they are, fluctuate. Naturally, technology valuations have been just as volatile.<\/p>\n\n\n\n
Fresh off stellar corporate earnings reports against a backdrop of surprising economic resiliency, technology momentum resumed after being arrested by July\u2019s sell-off. Semiconductors regained their poise after a month off, yet software stocks made greater strides. Previously cast as victims of February\u2019s SaaSpocalypse<\/em>, the recovery story is secondary to:<\/p>\n\n\n\n Beyond the reminders it offers, the chips-to-software rotation could signify a shift from expensive infrastructure to profitable enterprise applications.<\/p>\n\n\n\n The unfortunate deterioration of Tehran-Washington negotiations has given way to renewed military strikes. Central to the conflict and the broader global economy, the Strait of Hormuz is effectively still hostage. Nominal oil prices<\/em> are rapidly climbing and nearing a potentially critical $100\/barrel threshold.<\/p>\n\n\n\n More concerning would be what we\u2019ve floated in prior commentary. If the disruption evolves into a shortage of physical oil supplies<\/em>, the broader economic damage would be substantial and uneven. The difference between who can afford<\/em> <\/a>it? <\/a>and who can access <\/em>it? is far, far larger than one word implies.<\/p>\n\n\n\n Opening with a positive note is warranted: the Canadian stock market posted a strong gain in August as commodities (gold and oil) and the financials sector pushed higher.<\/p>\n\n\n\n This does little to offset household finances and the corporate environment, who will need to absorb a fresh wave of tariffs. Although levied at the national level, Ontario, Quebec, and B.C. are expected to feel the new measures more acutely due to the sectors being targeted.<\/p>\n\n\n\n Recognizing the disadvantage our smaller economy creates, the Federal Government\u2019s countermeasures take a similar tact. By issuing retaliatory tariffs against swing states and their crucial exports, that political leverage ahead of midterms might supplement the economic pressure we lack.<\/p>\n\n\n\n Closing on a positive note is also warranted: this issue stems from decades of overreliance on the United States as a trading partner. Disentrenchment through diversification takes time, but the share of Canadian exports to other<\/em> nations is at a four-decade high.<\/p>\n\n\n\n\n
Well-Oiled Conflict<\/h2>\n\n\n\n
Cross-Border Blows<\/h2>\n\n\n\n