Tech Stocks Crash, Bank of Canada Holds, and Inflation is Next
Clarity, Caution, and Crash: The Cost of AI & The Great Canadian Trade-Down
The S&P/TSX Composite Index (Canada’s stock market)started the week slow, anticipating Wednesday's final interest rate announcement, but finished 0.69% higher after the Bank of Canada delivered clarity to the market.
This week’s newsletter is packed with key data, including the BoC's latest stance, a deep-dive into what really drove earnings at Dollarama, Lululemon, Broadcom, and Oracle, and a look ahead to today's critical CPI (inflation data) release.
Here is the full breakdown of the major economic and market events this week:
📈 The Daily Market Flow
Monday, Dec 8: (Down 0.45%) Market started the week on the defensive, weighed down by losses in the Basic Materials sector and mirroring declines in U.S. markets.
Tuesday, Dec 9: (Minor Gain) Trading remained subdued as investors awaited the critical BoC decision on Wednesday.
Wednesday, Dec 10: (Up 0.75%) The TSX surged following the BoC's rate hold announcement. The clarity that the easing phase is paused removed immediate market uncertainty.
Thursday, Dec 11: (Up 0.52%) Continued positive sentiment led the TSX to a near record close of 31,660.70, driven by a mid-week sentiment surge.
Friday, Dec 12: (Down 0.42%) The market pulled back slightly from its high, down 133 points, weighed down by losses in the technology sector.
🇨🇦 Central Bank Action: BoC Holds, Signalling No More Cuts (For Now)
The biggest event of the week was the Bank of Canada's final interest rate announcement of the year on Wednesday, December 10th.
Rate Decision: The BoC maintained its target for the overnight rate at 2.25%. This was universally expected following the strong jobs report from the previous week.
The Message: Governor Tiff Macklem confirmed the current policy rate is "about the right level" to keep inflation on target.
What It Means: This cements the idea that the Bank's easing cycle (which saw four cuts earlier in 2025) is on pause...
📊 The Earnings Scorecard: Who is Winning the Consumer Battle?
The earnings releases this week provided a fascinating contrast in how different companies are navigating a slowing but spending-heavy consumer economy, from discount retail to high-end tech.
1. Dollarama ($DOL-TO)
✅ Beat: EPS of $1.17 beat forecasts on 22% sales growth. Raised full-year sales guidance.
🪙 Value Wins: Confirms Canadian consumers are increasingly seeking value and trading down, driving Dollarama's resilience.
2. Empire ($EMPA-TO)
❌ Miss: Profit fell to $159M (from $173M YoY). Sales up 2.8%, but profit was hit by higher costs and a cautious customer base.
🛒 Grocer Pressure: Shows the difficulty for major grocery banners (Sobeys, Safeway) to maintain margins amid intense price competition.
3. Costco ($COST)
✅ Beat: EPS of $4.34 beat estimates. Comparable sales grew 6.4% and membership fees rose 14%.
🛍️ Mass Value: Proves their membership model is stronger than ever. Consumers are consolidating purchases and staying loyal to the bulk-buying value proposition.
4. Lululemon ($LULU)
😶 Mixed: Strong international growth (China +46%) and a $1 billion stock buyback approved. However, Americas revenue decreased 2%. Stock surged nearly 10% on Friday.
🌏 International Shield: The domestic market is slowing down, but the combination of massive international expansion, a $1B buyback, and a clear CEO succession plan convinced investors the growth story remains intact.
5. Broadcom ($AVGO)
✅ Beat: AI-driven revenue grew 220% YoY, but stock fell 12%.
🔻 Margin Shock: The drop was due to management forecasting that accelerating AI revenue will lead to lower gross profit margins in the near term.
6. Oracle (ORCL)
🫤 Beat EPS/Miss Revenue. Cloud Infrastructure revenue surged 68%, with contracted revenue (RPO) up 438%.
💸 The CapEx Trap: The stock fell on aggressive guidance, including a $15 billion increase in Capital Expenditure, due to the high cost of funding the massive new AI deals (Meta, NVIDIA).
💰 Other Key Economic Data Releases
👨👩👧👦 Household Wealth Soars
Statistics Canada released Q3 2025 data showing strong financial momentum:
Household Net Worth: Rose by a massive $460.5 billion (+2.6%) in the third quarter of 2025, reaching a total of $18.4 trillion.
Driver: This was primarily driven by a sharp 4.8% jump in households' financial assets as equity markets continued to rally strongly.
🇨🇦 Immigrant Entry Wages Decline
A significant decline in the median entry wage for new immigrants was reported:
Median Entry Wage: Declined by 10.6% to $39,800 in 2023, the largest decline since 1991.
Context: This decline highlights growing wage disparity and potential weakness in the Canadian job market's ability to absorb new workers effectively.
📅 Looking Ahead: Inflation Looms Large
After the dust settled on the BoC rate decision, the focus immediately shifts to the Consumer Price Index (CPI) release for November coming out early Monday, December 15th.
The Bank of Canada has stated its current policy is "about right," but a surprise jump in this report would quickly force the market to rethink the likelihood of any rate cuts in 2026. The key will be the core inflation measures (CPI-trim, CPI-median, and CPI-common) which the BoC watches closely to confirm if underlying price pressures are truly slowing down.
In summary, the week of December 8th gave markets the anchor of a steady interest rate policy while illuminating the split between consumers seeking deep value (Dollarama, Costco) and high-end discretionary spending(Lululemon North America) struggling against economic caution.
As the year wraps up, now is the perfect time to review your strategy and ensure your portfolio, and financial plan are positioned for the shifting consumer landscape.