In January 2025, the Canadian market experienced a general rebound, buoyed by a tense but stimulating global environment for energy. The overall TSX index rose by +4.43%, while the energy index (TTEN) recorded a more moderate increase of +3.01%, as illustrated in Figure 1 below.
The month of January was marked by hard-hitting political decisions: Donald Trump's return to the White House was accompanied by a declaration of national energy emergency in the United States, accelerating fossil fuel projects and suspending several environmental regulations. At the same time, the official withdrawal of the United States from the Paris Agreement prompted strong reactions, notably a strengthening of climate commitments in Europe and Asia. These developments have fuelled instability on world markets, while rekindling debates on the future of energy.
For Canada, these events had direct repercussions: Trump threatened to impose 25% tariffs on Canadian energy imports, raising concerns about the sector's export competitiveness. These tensions dampened investor enthusiasm in certain energy stocks, although the rise in oil prices offset these effects. WTI reached a monthly peak of CAD 721.98/m³ around January 15, before falling back to CAD 658.61/m³ at the end of the month. Brentafollowed a similar pattern, peaking at 748.77 CAD/m³.
Despite these fluctuations, the energy sector benefited overall from this temporary rise in prices, sustaining its performance until January 22, as shown by the TTEN trend. However, the announcement of the possible return of protectionist measures led to profit-taking in the last week of January, moderating the sector's advance.
On the currency front, the Canadian dollar remained relatively stable, hovering around 1.43 USD/CAD, with no major decisions by the Bank of Canada or the U.S. Federal Reserve during the month. Inflation in Canada remained under control, not exceeding 1.9%, maintaining expectations of a gradual easing of rates over the coming months.
From a broader perspective, markets were driven by contrasts: divergent climate policies between the United States and other major economies rekindled international interest in clean technologies, particularly following China's announcement of a record for nuclear fusion energy.
In short, January 2025 illustrates the growing geopolitical complexity surrounding energy. While the Canadian energy sector benefited from the temporary strength of oil prices, it was also exposed to the uncertainties associated with US protectionist decisions. Nevertheless, the Canadian market ended the month in positive territory, buoyed by the good performance of several sectors, but with moderate growth in the energy sector, held back by investor caution in the face of bilateral tensions.
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