“Informed by the past, engaged with the present, and looking towards the future.” – Anonymous

Markets delivered impressive returns in 2025, but the journey was anything but smooth. AI breakthroughs, shifting tariff policy, and evolving central bank strategies shaped a year that rewarded discipline and patience alike.

This recap is designed as a pre‑event primer for the upcoming Bellwether Annual Market Outlook 2026 webinar. The goal is simple: revisit what truly drove markets in 2025 so the discussion around 2026 can focus on what matters most for your wealth.

What drove markets in 2025

Two forces dominated investor attention in 2025: AI and concentration risk on one side, and policy uncertainty—from tariffs to rate cuts—on the other.​

AI remained a powerful engine of returns, but leadership became increasingly narrow with the likes of semiconductor manufacturers and hyperscalers. A handful of large technology companies continued to set the tone for equity indices, raising questions about diversification and how much optimism was already priced in. At the same time, new competitors challenged the idea that today’s leaders would remain unchallenged indefinitely.​

Policy, meanwhile, had more pronounced impacts than usual. Tariffs moved from campaign slogan to concrete action, central banks started edging away from peak rates, and a record‑long U.S. government shutdown temporarily removed the economic data that markets rely on. Investors were reminded that policy risk and macro cross‑currents can matter just as much as earnings in such an environment.

Below, we’ve listed 8 defining moments of 2025. Such an eventful year left us spoiled for choice, and our selection is based on which headlines capture the year’s overall theme best.

1. DeepSeek’s competitive shock to AI (January 27, 2025)

The narrative around artificial intelligence shifted when DeepSeek’s R1 model arrived, offering high‑end performance at a fraction of the expected cost. Markets reacted quickly: enthusiasm for the AI theme remained, but the assumption that value would be captured by a small set of U.S. giants started to look less certain, all while calling into question valuation multiples and the amount of capital needed to bring AI software to market. For investors, it was an early reminder that even dominant secular trends can face rapid competitive pressure.

2. Liberation Day tariffs and equity market stress (April 2, 2025)

Tariff headlines turned into tariff policy when the U.S. unveiled its “Liberation Day” framework, outlining broad, reciprocal levies tied to perceived trade imbalances. Equity futures sold off and volatility spiked as investors attempted to price in the possibility of a more entrenched trade conflict. The announcement underlined how quickly protectionist measures can affect sentiment, margins, and inflation expectations, particularly for trade‑dependent economies like Canada.​

3. Tariff pause and stock relief rally (April 9, 2025)

Just days later, a 90‑day pause on most non‑China tariffs allowed markets to catch their breath. The S&P 500 staged a powerful rebound as investors interpreted the move as a signal that negotiation might still temper the most aggressive proposals. While the underlying issues remained unresolved, this episode illustrated how sensitive markets had become to the day‑to‑day evolution of trade policy.

4. A tighter political runway in Canada (April 28, 2025)

In Canada, the federal election returned a Liberal minority under Prime Minister Mark Carney, providing continuity at a time when trade relations and tariff risk were front of mind. The result gave Ottawa a renewed—if not unlimited—mandate to navigate a more complicated North American landscape, balancing domestic priorities with the realities of a shifting global trade regime.​

5. The Fed’s risk‑management cut (September 18, 2025)

After months of holding firm, the U.S. Federal Reserve lowered its policy rate to a 4.00%–4.25% range and described the move as an exercise in “risk management.” The language was deliberate: the Fed acknowledged softer data and rising downside risks without suggesting an imminent recession. For markets, the cut marked the beginning of a gradual shift away from restrictive policy and raised fresh questions about how far the easing cycle might ultimately go.

6. A record‑long U.S. government shutdown (October 1 to November 12, 2025)

A 43‑day partial U.S. government shutdown—the longest on record—temporarily removed key economic data from the market’s field of view. Without timely inflation and employment figures, investors and policymakers alike were forced to operate in a rare information vacuum. The episode highlighted the extent to which modern markets depend on reliable, frequent data to anchor expectations around growth and policy.​ 

7. Canada’s Budget 2025 and nation‑building projects (November 4, 2025)

Canada’s Budget 2025 laid out roughly $280 billion in planned investments over five years, with a particular focus on housing, infrastructure, and defence. Rather than emphasizing short‑term stimulus, the budget pointed toward long‑term capacity building: easing structural bottlenecks, strengthening productivity, and reducing reliance on any single trading partner. For investors, it signalled that fiscal policy will remain an important layer in Canada’s economic growth story—ironically coming shortly after the Bank of Canada said that monetary policy can only achieve so much on its own.

8. A Fed cut that cooled expectations (December 10, 2025)

The Fed’s second rate cut of the year lowered the target range once again, but the accompanying dot-plot projections pointed to fewer reductions in 2026 than many had anticipated. The combination of near‑term support and longer‑term caution forced markets to reassess assumptions around the depth and speed of the cutting cycle. Once again, the message was one of balance: support where needed, but not at the expense of inflation, credibility, and independent decision-making.

Why they matter for markets in 2026

Taken together, these events left investors with three key lessons heading into 2026. First, powerful themes like AI can drive stock returns, but they can also create concentration risk and leave portfolios sensitive to changes in sentiment or competition. Second, trade and fiscal policy—whether in the form of tariffs, shutdowns, or multi‑year budgets—can reshape the landscape more quickly than many bottom‑up forecasts anticipate. Third, central banks are moving toward easing, but not in a synchronized or predictable way.​

For diversified investors, it remains important to prepare for a range of outcomes rather than rely on a single narrative. There are no bad questions, but sometimes, there are better ones to ask:

The simple question	The better question	The difference
Will AI continue?	Where along the value chain can I participate, and at what price?	Acknowledges the breadth of associated opportunities to identify value.
Will tariffs go away?	How might supply chains, currencies, and regional growth adapt to tariffs?	Recognizes the inherent uncertainty in trade policy and unknown variables.

Key events investors will be watching in 2026

Several known milestones already occupy the 2026 calendar. While markets will respond to many unanticipated developments along the way, these events provide useful signposts to keep in mind:

1. CUSMA/USMCA joint review (July 1, 2026)

The first mandatory six‑year joint review of the Canada–U.S.–Mexico Agreement begins on July 1, 2026. The three countries will assess how the agreement has functioned and decide whether to extend it for another 16 years or open the door to more frequent reviews and potential renegotiation. For Canadian exporters, manufacturers, and investors, this review will be central to understanding future tariff and market‑access risk.​ How trade was treated in 2025 may indicate what sort of concessions or agreements we can expect nations to come to the table with.

2. U.S. midterm elections (November 3, 2026)

All 435 seats in the U.S. House of Representatives and roughly one‑third of the Senate are slated for election in early November. Historically, midterms have influenced expectations around fiscal policy, regulation, and the degree of political gridlock—factors that can affect everything from bond yields to sector leadership.​ 

3. Pending U.S. Supreme Court ruling on universal tariffs

In 2026, markets will also be watching for a U.S. Supreme Court decision on the legality of universal tariffs, which have been challenged in lower courts as exceeding executive authority and conflicting with existing trade law. A ruling that upholds broad tariff powers could entrench protectionism as a more permanent feature of U.S. policy, while a decision that curtails them would force a rethink of how future trade measures are designed and implemented.​ It’s worth noting that there are alternative measures to enforcing import taxes if courts rule against them, but implementing them would take time.

4. A crowded global election and policy calendar

Beyond North America, several major economies will head to the polls or revisit key policy frameworks in 2026, adding another layer of uncertainty around trade, regulation, and public spending. At the same time, central banks are unlikely to move in lockstep: the Fed, Bank of Canada, European Central Bank, and Bank of Japan may find themselves at different points in their respective easing or normalization cycles, with implications for currencies and cross‑border capital flows.​

How markets respond to these waypoints will depend on the economic backdrop at the time, the details of policy decisions, and the extent to which expectations have already moved in advance.

Join the conversation: Bellwether’s 2026 Market Outlook

This recap only scratches the surface of what 2025 taught investors—and of what 2026 may hold. The more important question is how to translate these developments into practical portfolio decisions: where to take risk, where to be patient, and how to stay diversified when headlines move faster than fundamentals.​

Those are the questions our investment team will explore in depth during our upcoming Bellwether Annual Outlook 2026 webinar, as well as:

• How AI, tariffs, and policy decisions are shaping the opportunity set across regions and asset classes.
• What central‑bank divergence could mean for interest rates, currencies, and fixed income markets.
• How to think about diversification and risk management after a year of narrow leadership and elevated policy risk.

Reserve your spot as we unpack what these shifts could mean for your portfolio in the year ahead—with our live Q&A period at the end, you’ll be able to get answers directly from our investment team on the questions that matter most.