Category: Canada

• The ASX 200’s upbeat mood didn’t last long. The index has slipped today after a tech rout on Wall Street

• Trump’s auto import tariffs announcement has absolutely not helped matters on a macro level

• Hey-ho, at least The Reject Shop has found itself a bargain

At the time of writing, the ASX 200 is down 0.53% after a tough session on Wall Street.

The S&P 500 shook off a percentage point overnight, the Dow Jones dipped 0.3 per cent and the tech-heavy Nasdaq slumped 2 per cent.

In fact, along with Trumpian tariffs rearing their ugly head(s) again, it was partly a tech sell-off that has set the tone for today, with ‘Magnificent Seven’ stocks including Nvidia and Tesla taking a hammering.

AI darling Nvidia was hit hardest, falling 6% to bring its loss for the year so far to 15.5%. Other AI stocks took collateral damage.

Tesla copped a 5.58% loss meanwhile as it continues to attempt to absorb some politically charged anger being thrown at CEO Elon Musk.

Meanwhile, other US automakers were wrecked after the White House revealed that President Donald Trump would be announcing tariffs on auto imports, confirming a 25 per cent tariff.

“US auto giants have already spread their production around North America following prior free-trade deals encompassing the United States, Canada and Mexico. General Motors sank 3.1%. Ford Motor went from an early gain to a loss and back before inching up by 0.1%,” wrote Bloomberg.

Per The Australian’s reporting, the US will start collecting the auto tariffs on April 3. The 25 per cent tariff will be added on top of existing duties, including a 2.5 per cent tariff currently imposed by the US.

Meanwhile, Asian carmakers have been feeling the tariffs fear, too.

Per The Australian:

In Japan, Toyota Motor shares were recently down 3.2 per cent, Nissan Motor was 3 per cent lower and Honda Motor was off by 2.3 per cent.

In South Korea, Hyundai Motor was 2.9 per cent lower and Kia was down 1.7 per cent.

Anyhoo, what else, before we look at some ASX market headlines? How’s the crypto market holding up? Better than expected, really (for now). Bitcoin is floating around US$87,400, just trading within the fairly tight $86k-$89k range it’s been in for the past few days.

The Aussie dollar, meanwhile, is trading around US62.84c.

Here’s what the sectors looked like a short time ago. Tech… yikes.

ASX market news

Discount store chain The Reject Shop (ASX:TRS) was soaring about 110% earlier today after a big takeover offer (more details below) from a Canadian giant in the bargain basement biz – Dollarama, which is based in Montreal and listed on the Toronto Stock Exchange.

The takeover, if approved by shareholders, is expected to be completed in the second half of this year.

Meanwhile, WiseTech Global (ASX:WTC) was attempting to stem its bleed earlier after major shareholder AustralianSuper’s $50m selldown. The tech rout overnight won’t be helping matters for the embattled software player, either. At time of writing, WTC is down 2.6%.

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for March 27 :

The Reject Shop (ASX:TRS), as mentioned briefly above in ASX Market News, has been flying today, to the tune of 110%, after announcing Canadian retailer Dollarama has made a $259 million takeover offer. It has the backing of the Aussie company’s largest shareholder, Kin Group, controlled by billionaire Raphael Geminder.

TRS said it had entered into a binding scheme implementation agreement with Dollarama for the takeover price of $6.68 per share, representing a 112% premium to the company’s most recent closing price.

Linius Technologies(ASX:LNU) is continuing its upward trend, rising 33% in morning trade following yesterday’s announcement it was establishing a $750,000 convertible note facility and binding commitments for $300,000 in notes from professional and sophisticated investors.

LNU will use the extra funding as an additional runway for unlocking growth, delivering on a growing pipeline and scale from new and existing partnerships with industry leaders Prime Focus, Fujitsu, Magnifi and Avid along with its goal of achieving cashflow breakeven.

ASX SMALL CAP LOSERS

Here are the worst performing ASX small cap stocks for March 27 :

IN CASE YOU MISSED IT

Lithium explorer Chariot Corporation (ASX:CC9) is raising up to $2 million through convertible note financing, with an initial drawdown of $600,000. The structure offers capital flexibility while minimising the dilution associated with a standard equity raise.

Medical technology company Singular Health Group (ASX:SHG) has completed a $500,000 raise through the issuance of over 5 million new shares to Provider Network Solutions (PNS) as part of a cornerstone investment. The company has also issued 50,000 shares from the exercise of options, with the PNS shares subject to a 9-month voluntary escrow.

Scorpion Minerals (ASX: SCN) has secured commitments to raise $250,000 through the issuance of 12.5 million shares at 0.2 cents per share, with proceeds going toward advancing the Murchison Gold Strategy and near-term drilling.

At Stockhead, we tell it like it is. While Chariot Corporation, Singular Health Group and Scorpion Minerals are Stockhead advertisers, they did not sponsor this article.

Originally published as Lunch Wrap: Tech stocks take a beating; Trump’s auto tariffs weigh

Every dormant trend comes back to life sooner or later. Like baggy jeans. Or diversifying your investments. This is investment reporter Tim Shufelt and today we’re talking about investors rediscovering the virtues of a well-rounded portfolio. We’ll also look back at the peak of the dot-com bubble 25 years ago and how investors have fared since, plus a few Canadian stock picks that could pop once we finally get some clarity on tariffs.

DIVERSIFICATION

Of eggs and baskets

Just a few short months ago, the U.S. stock market was still the only game in town. It was assumed that Trump 2.0 would only strengthen the era of American exceptionalism that had dominated financial markets through the decade prior. Over that time, U.S. equities generated an incredible 15 per cent annualized rate of return, more than doubling the performance of non-U.S. stocks, which had lots of investors wondering why they needed to bother with international equities at all.

Then Trump manufactured a shock that has put a U.S. recession back on the table and has revived the spectre of inflation. Consumer confidence is tanking. Big Tech has hit a brick wall. Suddenly, there’s life outside of U.S. stocks. Let’s look a little closer at some diversifiers getting a fresh look by investors.

Non-U.S. stocks

Few expected long-ignored European stocks to be the hottest trade in 2025, but here we are. The MSCI Europe Index is up by 15 per cent since the start of the year, compared to a decline of about 3 per cent in the S&P 500. At this point, you may be thinking you missed out on the European comeback. Two points to keep in mind. First, the valuation gap has closed a bit, but not by much. European stocks are still relatively cheap at around 14 times forward earnings, compared to the U.S. multiple of around 20 times earnings.

Secondly, there has been a complete role reversal in terms of government spending. The U.S. fiscal position is weakening after years of enormous budget deficits, which, incidentally, helped prop up U.S. stocks. “A hyper-accommodative fiscal policy in the eurozone provides a margin of safety to the economy and stocks, while the opposite is true in the U.S. with the Trump administration determined to shrink the budget deficit,” Martin Roberge, portfolio strategist at Canaccord Genuity, wrote in a note.

Canadian stocks also have a valuation advantage, which is perhaps one reason foreign investors seem to be returning to the TSX, according to Brian Belski, chief investment strategist at BMO Capital Markets. “Our view on Canada remains resolute,” Belski wrote Wednesday. “Canada remains a strong relative value play that can and will continue to converge with the U.S.”

Bonds

This is traditionally where investors park money in moments of economic distress, and for good reason. “Bonds have been the best place to be in most previous recessions,” Morningstar portfolio strategist Amy Arnott writes. The problem is, that might not hold up this time around. Bonds are a defensive investment, in part, because central banks tend to cut rates as a stimulus effort, which in turn, elevates bond prices. But inflation is perking up, which could keep the Federal Reserve from cutting rates even if the U.S. economy falters.

This is why investors need to think about “diversifying their defensives,” writes Craig Basinger, chief market strategist at Purpose Investments.

Gold

The forces that drive gold prices can be a difficult thing to pin down. Gold has long been thought of as a hedge against inflation. But when consumer prices went haywire in 2021-22, gold went nowhere. Then gold prices shot up last year as inflation came back down to target.

The primary driver of gold’s latest run? The rise of global economic uncertainty, according to Econofact, which is published by Tufts University. Nearly half of the rally in gold over the last year or so can be chalked up to spiking uncertainty indicators, the authors said.

The upshot is gold should do well as long as economic uncertainty remains high. For more on that, check out the chart below.

MARKET PEAKS

Oh, no! I invested at the top!

If you’re like nearly every other investor in the world, you’re a terrible market timer. But don’t despair, the stock market has a way of fixing even the most poorly timed trades.

Tuesday marked the 25th anniversary of the peak of the dot-com bubble, as measured by the S&P 500 index. Money invested on that day would have lost nearly half of its value over the next two-and-a-half years. But even such a star-crossed investment would have turned out fine eventually.

From the market peak to today, the S&P 500 generated annualized returns of more than 7.5 per cent over those 25 years, including dividends. Bespoke Investment Group compiled a list of “100-baggers” – stocks in the Russell 2000 index that grew by at least 10,000 per cent over that time.

As I wrote a few months ago, money invested at the worst possible moments of the past century will recover given enough time in the stock market.

CHART OF THE DAY

Uncertainty in Canada has literally gone off the charts. The Economic Policy Uncertainty Index for Canada scans major media for indicators of uncertainty related to things like government spending, regulation, tax and central bank policy. And it catapulted to unprecedented highs in February, towering over previous calamities like the COVID-19 pandemic, the global financial crisis, and the popping of the dot-com bubble. Such is the power of Donald Trump’s tariff debacle to cast doubt over Canada’s economic future on a bewildering, existential scale.

What does this mean for investors? You may have heard it repeated four or five times daily that the stock market hates uncertainty. So, it follows that even a sliver of clarify about Canada’s economic fate could prove positive for domestic stocks that have been hit hard by the trade war. ATB Capital Markets identified four TSX listings that could see some relief: Air Canada, Cargojet Inc., Exchange Income Corp., and NFI Group Inc.

THE ESSENTIALS

Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page.

Globe Investor highlights

Norman Rothery updates us on how his stable dividend portfolios are performing

Investing professor Dr. George Athanassakos thinks we’re in a new era of deglobalization and even bottom-up value investors need to price in the risks

The rosy U.S. earnings vista is at odds with a gloomy growth outlook, warns Reuters’ Jamie McGeever

Forex markets – including traders in the Canadian dollar – still suspect Trump is bluffing

What’s up next

Buckle up for some potentially market-moving economic readings later this week. Most notably, on Friday, the U.S. will release the PCE price index for February – closely monitored by the Fed for any signals of inflationary pressures – as well as the latest University of Michigan consumer sentiment index. Friday also brings Canada’s GDP report for January, which is forecast to rise modestly. Of course, the biggest market event will likely need to wait until April 2, when Mr. Trump is promising “Liberation Day” for American trade. Get your bets in now for what he’s about to unveil, because it’s almost anyone’s guess at this point.

See our full economic and earnings calendar here (You can bookmark the page – it gets updated weekly)

TFSA Investors, we want to hear from you

Last year, we launched our new TFSA Trouncers series, where we profiled Canadian investors who’ve accomplished incredible feats with their tax-free savings accounts. We’re still on the lookout to find more Canadians who wish to share their experiences – especially those who’ve had tremendous success or failures to tell us about. To participate, drop us an e-mail at dakeith@globeandmail.com.

As Canada moves toward stronger AI regulation with the proposed Artificial Intelligence and Data Act (AIDA), its southern neighbour appears to be taking the opposite approach.

AIDA, part of Bill C-27, aims to establish a regulatory framework to improve AI transparency, accountability and oversight in Canada, although some experts have argued it doesn’t go far enough.

Meanwhile, United States President Donald Trump’s is pushing for AI deregulation. In January, Trump signed an executive order aimed at eliminating any perceived regulatory barriers to “American AI innovation.” The executive order replaced former president Joe Biden’s prior executive order on AI.

Read more:
How the US threw out any concerns about AI safety within days of Donald Trump coming to office

Notably, the U.S. was also one of two countries — along with the U.K. — that didn’t sign a global declaration in February to ensure AI is “open, inclusive, transparent, ethical, safe, secure and trustworthy.”

Eliminating AI safeguards leaves financial institutions vulnerable. This vulnerability can increase uncertainty and, in a worst-case scenario, increase the risk of systemic collapse.

Read more:
The Paris summit marks a tipping point on AI’s safety and sustainability

The power of AI in financial markets

AI’s potential in financial markets is undeniable. It can improve operational efficiency, perform real-time risk assessments, generate higher income and forecast predictive economic change.

My research has found that AI-driven machine learning models not only outperform conventional approaches in identifying financial statement fraud, but also in detecting abnormalities quickly and effectively. In other words, AI can catch signs of financial mismanagement before they spiral into a disaster.

In another study, my co-researcher and I found that AI models like artificial neural networks and classification and regression trees can predict financial distress with remarkable accuracy.

Artificial neural networks are brain-inspired algorithms. Similar to how our brain sends messages through neurons to perform actions, these neural networks process information through layers of interconnected “artificial neurons,” learning patterns from data to make predictions.

Similarly, classification and regression trees are decision-making models that divide data into branches based on important features to identify outcomes.

Our artificial neural networks models predicted financial distress among Toronto Stock Exchange-listed companies with a staggering 98 per cent accuracy. This suggests suggests AI’s immense potential in providing early warning signals that could help avert financial downturns before they start.

However, while AI can simplify manual processes and lower financial risks, it can also introduce vulnerabilities that, if left unchecked, could pose significant threats to economic stability.

The risks of deregulation

Trump’s push for deregulation could result in Wall Street and other major financial institutions gaining significant power over AI-driven decision-making tools with little to no oversight.

When profit-driven AI models operate without the appropriate ethical boundaries, the consequences could be severe. Unchecked algorithms, especially in credit evaluation and trading, could worsen economic inequality and generate systematic financial risks that traditional regulatory frameworks cannot detect.

Algorithms trained on biased or incomplete data may reinforce discriminatory lending practices. In lending, for instance, biased AI algorithms can deny loans to marginalized groups, widening wealth and inequality gaps.

In addition, AI-powered trading bots, which are capable of executing rapid transactions, could trigger flash crashes in seconds, disrupting financial markets before regulators have time to respond. The flash crash of 2010 is a prime example where high-frequency trading algorithms aggressively reacted to market signals causing the Dow Jones Industrial Average to drop by 998.5 points in a matter of minutes.

Furthermore, unregulated AI-driven risk models might overlook economic warning signals, resulting in substantial errors in monetary control and fiscal policy.

Striking a balance between innovation and safety depends on the ability for regulators and policymakers to reduce AI hazards. While considering financial crisis of 2008, many risk models — earlier forms of AI — were wrong to anticipate a national housing market crash, which led regulators and financial institutions astray and exacerbated the crisis.

A blueprint for financial stability

My research underscores the importance of integrating machine learning methods within strong regulatory systems to improve financial oversight, fraud detection and prevention.

Durable and reasonable regulatory frameworks are required to turn AI from a potential disruptor into a stabilizing force. By implementing policies that prioritize transparency and accountability, policymakers can maximize the advantages of AI while lowering the risks associated with it.

A federally regulated AI oversight body in the U.S. could serve as an arbitrator, just like Canada’s Digital Charter Implementation Act of 2022 proposes the establishment of an AI and Data Commissioner. Operating with checks and balances inherent to democratic structures would ensure fairness in financial algorithms and stop biased lending policies and concealed market manipulation.

Financial institutions would be required to open the “black box” of AI-driven alternatives by mandating transparency through explainable AI standards — guidelines that are aimed at making AI systems’ outputs more understandable and transparent to humans.

Machine learning’s predictive capabilities could help regulators identify financial crises in real-time using early warning signs — similar to the model developed by my co-researcher and me in our study.

However, this vision doesn’t end at national borders. Globally, the International Monetary Fund and the Financial Stability Board could establish AI ethical standards to curb cross-border financial misconduct.

Crisis prevention or catalyst?

Will AI still be the key to foresee and stop the next economic crisis, or will the lack of regulatory oversight cause a financial disaster? As financial institutions continue adopt AI-driven models, the absence of strong regulatory guardrails raises pressing concerns.

Without proper safeguards in place, AI is not just a tool for economic prediction — it could become an unpredictable force capable of accelerating the next financial crisis.

The stakes are high. Policymakers must act swiftly to regulate the increasing impact of AI before deregulation opens the path for an economic disaster.

Without decisive action, the rapid adoption of AI in finance could outpace regulatory efforts, leaving economies vulnerable to unforeseen risks and potentially setting the stage for another global financial crisis.