If one follows seasonal trends, a well-known investment strategy, once we get through the first few weeks of October of each year stock markets historically provide positive returns in the final quarter of the year.
Based on this, an investor would expect global stock markets to continue to rally going into year end, but 2025 has not been a typical year for the stock and bond markets. We started the year off on a positive trend until tariffs took center stage in late March and into early April.
We experienced a brief bear market in the US S&P 500 Index and the Nasdaq Composite Index, meaning they were down at least twenty percent from their highs during this period. The stock market then followed up this sell off with quite a strong market rally, which shows no signs of subsiding. This rally is continuing even though the middle of August till the middle of October tends to be the weakest period of a year for stock markets.
2025 has seen increased stock market volatility yet still been a positive year. There are several key reasons. The first is interest rates are falling globally. Even the FED (Federal Reserve Board), who sets interest rates in the US, recently cut its short-term interest rate and stated there could possibly be another three interest rate cuts over the next six to twelve months. Declining interest rates tends to be positive for global stock and bond markets.
The second key factor to the stock market staying positive is that many of the high tariff threats by President Trump appear to be a negotiating tool. As trade agreements are being completed, the tariff rates to be charged are now more reasonable, which is good for the markets.
The third factor helping the stock market move higher is the development and implementation of artificial intelligence (AI) technology. We are experiencing the second major technological change over roughly the last thirty years, the first being the development of the personal computer and the internet.
In summary, I expect the stock market volatility to continue with the global trends for stocks and bonds over the next six to twelve months remaining positive. We will maintain a conversative bias, staying mostly invested, as returns in cash investments are dropping as interest rates fall.
If you have any questions or concerns, please feel free to contact me.
Best regards,
Bill Achtymichuk, CIM®, FCSI®, CFP®
Portfolio Manager / Senior Wealth Advisor
iA Private Wealth | Active Wealth Partners
Insurance Advisor| iA Private Wealth Insurance*
5470 Calgary Trail NW, Suite 202
Edmonton AB, T6H 4J8
T: 780-944-2690
F: 780-413-4497
TF: 800-474-2690
bachtymichuk@activewealthpartners.com
www.activewealthpartners.com | www.iaprivatewealth.ca