Could Clarity Be on The Horizon?

Despite persistent headwinds, investor sentiment appears to be turning a corner.

April brought with it an abundance of negative headlines: President Trump recorded the lowest 100-day job approval in modern history, consumer sentiment plunged to its second-lowest level on record according to the University of Michigan, and fears of an economic slowdown loomed large. Yet, in stark contrast to this pessimism, the markets staged a remarkable comeback and disciplined investors were rewarded.

The S&P 500 recently posted a nine-day winning streak— the longest since 2004—driven by a combination of surprisingly strong corporate earnings, a resilient U.S. labor market, and growing optimism around U.S.– China trade relations. With the index now back at pre-Liberation Day (April 2nd) levels, the market has effectively erased recent losses, signaling a robust underlying confidence.

This resilience comes even as macroeconomic uncertainties persist. Investor psychology, often driven by expectations rather than reality, is shifting— buoyed by developments that suggest the potential for stabilization and even growth.

The upcoming U.S.– China trade talks in Geneva could serve as a pivotal moment. With both sides facing pressure from domestic and international stakeholders, the talks are being viewed as an "icebreaker" that could lay the groundwork for broader de-escalation. While a full resolution is unlikely in one sitting, the symbolism of returning to the negotiating table in a neutral venue underscores a mutual recognition of the high stakes involved.

A credible path to de-escalation could unlock future upside for equities. As the two largest economies in the world, an easing of tensions between the U.S. and China would not only reduce tariff pressures but also provide a much-needed boost to global trade flows and corporate investment outlooks.

So, where do we go from here? While risks remain—from geopolitical unrest to unpredictable domestic policies—markets have shown a willingness to look beyond near-term volatility in favour of longer-term progress. If trade talks gain traction and economic data holds steady, I believe equity markets have further room to climb.

Investors should continue to stay diversified and focused on fundamentals, while remaining disciplined amid evolving geopolitical narratives.

The coming weeks may offer clarity—or at least direction—as the global economy takes tentative steps toward renewed cooperation.

On a side note, for those of you who didn’t have a chance to attend the May 6th session and hear Theresa Shutt, Harbourfront’s Chief Investment Officer, share her comments on the economic landscape and how it could affect the markets, I’ve included a link to the replay here: https://www.youtube.com/watch?v=Lw55hg4WW4c

‍