Lexicon Financial Group Weekly Update — July 9, 2025

Jul 11

“In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”

— Benjamin Graham, a British-born American financial analyst, economist, accountant, investor and professor

From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel

ISSUE 187

Looking Around

We are past the halfway mark for 2025. It’s been… interesting. We’ve witnessed the continuing possibility of a global trade war, more-than-usual tension in the Middle East, and a global re-alignment of economic and political alliances, thanks to U.S. trade policy. Stock markets fell and rose like the tides over the last few weeks. Given all this, it’s no wonder people are still nervous and anxious. But, there are some positives.

The tension in the Middle East that burst into a conflict between Iran and Israel has simmered down. Iran’s retaliation to the United States’ (U.S.) strategic bombing of Iran’s nuclear sites was to launch 14 missiles at the Al-Udeid U.S. Air Base in Qatar. Although this matched the 14 bombs dropped by seven American B-2s on June 21, Iran’s choice of target was telling: a U.S. air base, which, by design, is hardened against attack, and whose normal complement of U.S. military aircraft had departed weeks prior. (1)

More importantly, hours later, Iran and Israel agreed to a ceasefire which, despite a setback, seems to be holding. There was talk of Iran closing the Strait of Hormuz, which would have had an impact on the price of oil, especially in Europe. That didn’t happen.

Things appear less rosy on the trade front, but chalk up a win that the reciprocal tariiffs announced by President Trump will not be implemented until August 1, 2025. Sure, the number of trade deals is nowhere near the “90 deals in 90 days” promised, but the U.S. is playing hardball, so we need to see how the game plays out as other countries respond

For example, Japan, which was singled out to receive a Trump letter, has done little to hide its anger. The Japanese finance minister even hinted at using its ownership of the world's biggest stockpile of U.S. government debt (treasuries) as a source of potential leverage. Moreover, this inability by the U.S. to strike deals supports the belief that when it comes tariffs, we can expect rolling delays. This may be disruptive but will not have the impact of fully implemented tariffs on economies, stock markets and consumers globally.(2) Additionally, the markets seem to be anticipating some of this chaos, almost expecting trade disruptions to emerge over the next few quarters.

It is also worth noting that despite the uncertainty and the volatility over the last six months, stock markets have been resilient. Global stocks, after three solid months in negative territory, have surged back, ending the first half of 2025 on a positive note:

The MSCI All Country World Index rose nearly 10 per cent since the start of the year to hit a record high on July 4.
European equities have emerged as the surprise stars of 2025, with Greece leading the world in year-to-date gains.
Among a mixed performance from Asian benchmarks, South Korea has staged an impressive comeback. (3)
The S&P 500, after falling more than 19 per cent in April from its previous all-time high, reached new records just two months later as the market's worst fears about the impact of President Trump's tariffs dissipated. The Nasdaq Composite hit a new high last Thursday ahead of the July 4 holiday weekend, as a better-than-expected June jobs report cooled fears of a broader slowdown brewing in the U.S. economy. (4)
The S&P/TSX composite (TSX) outperformed the S&P 500 the first half of the year, led by commodities. (5)

The next six months are likely to bring uncertainties and challenges including the potential stagflationary effects of tariffs, namely, higher inflation and slower economic growth. The answer, as always, is to remain diligent and diversified

Read and Watch

Want deeper insight into topics in your Weekly Update? Then, read and/or right click:

Canada's retail sales up in April, likely to post big drop in May

Business Brief: The U.S. economy keeps humming along

World Business Report Podcast: The Next Chapter in US-Japan Economic Relations

Is China Entering Its ‘Japan Moment’?

Raymond James Markets & Investing: Lessons from the past, strategies for the future - CIO Larry Adam, July 2, 2025

Raymond James Economy & Policy: Not a good report on personal income and spending in May - Chief Economist Eugenio J. Alemán, June 27, 2025

Looking Back

At the end of last week, the S&P/TSX composite index (TSX) managed to grind out another all-time high led by gains for the real estate and consumer staples sectors, as long-term borrowing costs fell. For the week, the index was up 1.29 per cent, while it was up 9.33 per cent year to date. (6)

Major U.S. stock indexes finished a holiday-shortened week higher. The S&P 500 Index and Nasdaq Composite both closed last week at all-time highs for the second week in a row. On the economic data front, the Labour Department reported that the U.S. economy added 147,000 jobs in June. This was above economists’ estimates and up from May’s upwardly revised reading of 144,000. The unemployment rate ticked lower to 4.1 per cent, while average hourly earnings grew 0.2 per cent month over month.

Last week, the pan-European STOXX Europe 600 Index ended flat while other major European stock indexes ended the week mixed.

Japanese stock markets lost ground over the week through Thursday, as signs that progress in U.S.-Japan trade negotiations was stalling weighed on sentiment. Japan has reportedly continued to insist on the removal of all tariffs, especially on its key auto and auto parts industries, while the U.S. is said to be pushing for Japan to import more U.S. agricultural products. Investors are looking ahead to Japan’s Upper House election on July 20. This is expected to lead to some political uncertainty in the short term, given the dissatisfaction with Prime Minister Shigeru Ishiba’s government due to cost-of-living issues.

Mainland Chinese stock markets rose for the week ended Thursday. According to China’s statistics bureau, the manufacturing purchasing managers’ index improved in June to 49.7 from May’s 49.5 reading. The latest manufacturing PMI reading captured the first full month, after the U.S. and China agreed in May on a 90-day pause in their tariff war, which led to a temporary rebound in trade. Although it stayed below the 50.0 reading that separates growth from contraction, it beat economists’ forecasts and raised doubts about whether Beijing would step up stimulus measures in the near term. (7)

The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.