Market Recap* – October

1. What happened in the markets?

Canadian equities gained 0.97% in October. Stocks moved higher after the Bank of Canada lowered interest rates by 0.25%, bringing the overnight rate to 2.25%. This was the second cut in as many months, aimed at supporting a slowing economy and keeping inflation near the 2% target. The rate cut helped lift investor confidence, though the Bank signaled it may pause further reductions unless growth weakens more noticeably.

U.S. equities rose 2.34% during the month. The Federal Reserve also reduced rates by 0.25%, to a range of 3.75%–4.00%, citing signs of a cooling job market and moderating inflation. Investors viewed the move as a positive step toward a “soft landing,” helping push markets higher. Despite some uncertainty from the U.S. government shutdown earlier in the month, strong corporate earnings supported broad market gains.

Canadian fixed income posted a 0.69% return in October as lower interest rates boosted bond prices. With inflation easing and central banks signaling patience, bonds continued to provide stability and modest growth for balanced investors.

The Canadian dollar finished the month at 1.3981 against the U.S. dollar, marking a modest decline from its starting level. The currency’s weakness was driven by softer economic growth in Canada and continued demand for the U.S. dollar. This modest depreciation enhanced the value of international holdings.

2. What does it mean for Embark Funds?

Asset class	Change	Impact on cohorts
Canadian Equities	↑	Positive for younger cohorts with higher equity exposure. Bank of Canada rate cut supported sentiment; but slower growth limited the upside.
U.S. Equities	↑	Strong month for younger, growth-oriented cohorts. Broad U.S. market gains, supported by lower inflation and Fed rate cuts.
Bonds	↑	Bond gains especially benefited older cohorts focused on income and stability.
Money Market	↑	Modest gains benefited older cohorts focused on income and stability.
Canadian Dollar	↓ CAD	The softer Canadian dollar modestly boosted returns for growth-oriented portfolios.