Market Update

YTD November Returns – in C$, unless noted otherwise

Notes: Source: Bloomberg. Returns assuming the reinvestment of dividends/interest.

Equity markets delivered a wide dispersion of returns in November, with Canada outperforming meaningfully as the S&P/TSX Composite gained 3.9% and extended its exceptional year-to-date return to 30%, supported by broad strength across energy, financials, and materials. U.S. equities were largely flat, with the S&P 500 down 0.1% in Canadian-dollar terms but slightly positive in U.S. dollars, as gains remained heavily concentrated in mega-cap technology and AI-linked names while many cyclical and defensive sectors lagged. International developed markets posted marginal gains, with MSCI EAFE up 0.1%, while emerging markets declined 2.7% amid renewed weakness in China, softer Asian commodity demand, and early-month U.S. dollar strength. Global equities (MSCI World) slipped 0.2% overall, and fixed income and cash delivered modestly positive results, consistent with a stable-to-easing rate backdrop.

Economic Overview

Economic data across Canada and the U.S. continued to point to easing inflation alongside signs of slower growth. In Canada, headline CPI has cooled toward the low-2% range and Q3 GDP surprised to the upside at an annualized 2.6%, even as household consumption softened and business investment stalled. The Bank of Canada cut its policy rate to 2.25% in late October, its second consecutive 25-basis-point reduction, and is now expected to pause further easing as it balances moderating inflation with uneven economic momentum. In the U.S., the Federal Reserve lowered the federal funds rate by 25 bps to 3.75%–4.00% at its October 2025 meeting, responding to weakening manufacturing indicators, softening consumer sentiment, and a gradual rise in unemployment. Inflation progress has been steady but slow, leaving policymakers cautious about the pace of additional easing as growth signals lose momentum.

Outlook & Positioning

Market valuations, particularly in the United States, remain elevated, driven largely by the exceptional performance of mega-cap technology and AI-related stocks. Despite strong headline index returns, underlying breadth is weak, with more than one-third of S&P 500 constituents down year-to-date — underscoring how dependent the rally has become on a small group of dominant firms rather than broad economic strength. This narrow leadership increases vulnerability should AI sentiment cool or earnings expectations reset. Macro conditions also introduce uncertainty: while inflation is easing, growth indicators in the U.S. are softening, labour markets are showing early signs of strain, and manufacturing remains in contraction, all of which could pressure valuations if risk appetite fades. In Canada, easing inflation and recent rate cuts provide some support, but momentum remains uneven across sectors. Against this backdrop, markets appear priced for optimistic outcomes, leaving limited margin for error. Granite’s recent increase in cash holdings aligns with a more defensive posture, providing flexibility should market volatility rise or more attractive opportunities emerge.

In Granite News

As the year draws to a close, many clients take time to reflect on the impact they wish to make—both financially and personally. At Granite, we consistently do the same, both personally and as a firm.

Supporting Chez Doris – February Volunteer Initiative – Join Us!

As part of our Granite Gives Back community engagement efforts, we will be organizing a volunteer activity in support of Chez Doris this February. We are excited to give back and to do it together. Our team will be participating and we would also love to extend the invitation to join us.

Let us know if you and any of your friends or loved ones are interested at info@granitemfo.com