Canada’s real GDP fell 0.1% in April, reversing a 0.2% increase in March, according to Statistics Canada.

The national economy was dragged down by a broad recession in goods-producing industries, which fell by 0.6%, led by a sharp drop in manufacturing.

Meanwhile, the services sector posted a tiny 0.1% increase, providing a partial offset as 10 of the 20 major manufacturing sectors gained.

According to Statistics Canada, the manufacturing sector’s April fall was its worst monthly performance since April 2021, with a 1.9% drop.

Durable goods manufacturing declined 2.2%, while non-durable goods production fell 1.6%.

The fall reflects a drop in both domestic output and international demand, particularly in light of current trade tensions with the US.

Manufacturing sector contracts sharply, motor vehicles hit hard

Manufacturing of durable goods fell for the first time in four months in April, as eight of ten subsectors lost ground. The largest decline since September 2021 was a fall for transportation equipment manufacturing, down 3.7%.

That was driven by a 21.6% plunge in the “other transportation equipment” category and a 5.2% pullback in motor vehicle manufacturing, which occurred at the same time as lower shipments of passenger cars and light trucks.

The drop was due in part to reduced output by some automakers as the threat of new U.S. tariffs on Canadian exports of motor vehicles lingered, Statistics Canada said.

Output of non-durable goods also softened, with food manufacturing taking the lead with a 3.6% drop, the steepest monthly decline from that sector in almost a year, while petroleum and coal products fell 5.9%.

The drop was also facilitated by refineries across Canada undergoing extensive maintenance and turnaround activity in April.

The wholesale trade and resource sectors add to the Drag

Wholesale commerce declined 1.9%, the largest monthly decline since June 2023. Seven out of nine subsectors lost money, with the motor vehicle and parts wholesalers segment falling the most, by 6.8%.

This coincided with decreasing import and export volumes. Wholesalers of equipment, supplies, and miscellaneous items also experienced reductions, reflecting broader weakness in international trade.

The mining, quarrying, and oil and gas extraction sectors were unchanged in April. Oil and gas extraction fell 0.6%, owing mostly to reductions in natural gas and conventional crude output.

Oil sands extraction remained steady, with maintenance operations offsetting increases in bitumen output. A brief stoppage of the Keystone pipeline due to a break slowed oil transportation and export business.

However, support services for oil and gas production increased by 4.8%, owing to increased drilling and rigging activities.

The services sector provides modest support

On the services front, public administration (+0.8%) experienced its greatest monthly increase in over a year, driven by a 2.2% increase in federal government activity.

According to Statistics Canada, this was driven by operational increases associated with Canada’s federal election. Health care and education services expanded marginally, contributing to the 0.4% growth in the public sector as a whole.

Financial markets were active in April, boosting the finance and insurance sector by 0.7%. Financial investment services jumped 3.5%, the most in more than a year, as market volatility increased following the April 2 announcement of US tariffs.

High trade volumes on Canadian equity markets persisted until mid-month, fueled by anxiety before turning optimistic once a 90-day tariff respite was announced.

Arts, leisure, and recreation saw a 2.8% increase, the greatest performance since early 2022. Spectator sports took the lead, with five Canadian NHL clubs making the playoffs for the first time since 2017.

Increased attendance and event activities caused a boost in the overall industry.

Advance estimates point to continued weakness in May

According to preliminary figures for May, real GDP fell another 0.1%. The flash estimate shows persistent weakness in public administration, mining, and retail trade, offset only somewhat by strength in real estate, rental and leasing. The final data for May will be published on July 31, 2025.

Canada’s energy business remains inextricably linked to U.S. demand. According to Statistics Canada’s Value Added in Exports database, the mining, quarrying, and oil and gas extraction sector will rely on the United States for 60% of its output and 42% of its jobs by 2023.

The oil sands industry, in particular, was the most export-reliant, with 87% of its production and workforce dependent on US demand—an increase from 81% in 2014.

Crude oil exports reached a record 240.4 million cubic metres in 2024, with 229.8 million going to the United States.

While shipments to other countries increased dramatically following the inauguration of the Trans Mountain pipeline extension, the United States remains the primary destination for Canadian oil, exposing the sector to major geopolitical and trade risks.

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A top German data protection watchdog has called for tech giants Apple and Google to consider removing the Chinese AI app DeepSeek from their platforms, alleging the service unlawfully transfers user data to China without adequate safeguards.

Meike Kamp, Berlin’s data protection commissioner, said Friday that DeepSeek’s data handling practices are “unlawful” under the European Union’s General Data Protection Regulation (GDPR), and that her office has asked Apple and Google to initiate a “timely review” of whether the app should remain available in their respective stores.

“DeepSeek has not been able to convincingly demonstrate to my authority that the data of German users is protected in China at a level equivalent to that of the European Union,” Kamp said in a statement, warning that Chinese authorities possess “extensive access rights” to personal data handled by companies under their jurisdiction.

DeepSeek, a Chinese AI firm that gained attention for building a large language model using less advanced Nvidia chips at a fraction of the cost of competitors, has not responded publicly to the allegations.

According to its own privacy policy, DeepSeek stores various types of personal data—including user requests and uploaded files—on servers located in China.

The Berlin commissioner’s move escalates ongoing scrutiny over DeepSeek’s operations in Europe.

The company’s global chatbot AI app has amassed millions of downloads, raising regulatory concerns over privacy compliance and cross-border data transfers.

Will a broader EU ban for DeepSeek follow?

Under GDPR rules, companies are barred from transferring personal data outside the EU unless the destination country ensures an equivalent level of protection — a bar that EU regulators say China does not meet.

If Germany’s findings are upheld by other EU data protection authorities, the case could lay the groundwork for a region-wide ban of the app.

That decision, however, would require consensus among national regulators.

Both Apple and Google have yet to comment on whether they will act on the regulator’s request.

This is not the first time DeepSeek has faced scrutiny.

In February, Italy’s data protection authority ordered the company to block access to its app within the country.

In January, Irish officials demanded more information about the company’s data processing practices.

Belgium has advised government officials to avoid using the platform, citing privacy concerns.

In Spain, the consumer rights group OCU requested in February that the country’s data protection agency investigate potential risks posed by DeepSeek, though no formal ban has been implemented.

Meanwhile, in the United States, lawmakers are preparing to introduce legislation that would prohibit executive agencies from using AI models developed in China, further signaling growing scrutiny of Chinese-developed AI tools in Western jurisdictions.

If the Berlin watchdog’s warning leads to further enforcement actions or app store removals, DeepSeek could lose access to a major market.

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London is likely to experience scorching heatwaves this weekend, with temperatures climbing and peaking on Monday, according to the Met Office. 

Rising temperatures coincide with the start of play at the All England Club on Monday, potentially making it Wimbledon’s hottest ever opening.

Warm and humid weekend

A cloudy start is expected on Saturday, particularly in western areas where some rain or drizzle is likely, especially on upslopes, the Met Office said. 

However, the day will see an improvement across much of the UK. A band of cloud and rain is expected to move northward across central UK on Sunday.

Following a sweltering weekend, Monday’s temperatures are forecast to hit the mid-30s Celsius. This presents a challenging day for players, organizers, ticket holders, and those in queues. 

The Met Office said in an update:

The hottest day of the current spell is expected on Monday, with temperatures widely exceeding 30°C in central and eastern England, possibly reaching 34°C in London and towards Cambridge.

At 29.3C, the previous record temperature for the beginning of the grass court Grand Slam was recorded in 2001, according to a Reuters report.

Monday’s anticipated heatwave is predicted to exceed the 2015 tournament record of 35.7 degrees, a year when on-court temperatures were considerably higher.

A 10-minute break in play will likely be triggered by Wimbledon’s heat rule when the Wet Bulb Globe Temperature (WBGT) reaches or exceeds 30.1 degrees Celsius.

The Wet Bulb Globe Temperature (WBGT) will be measured at three distinct times: prior to the start of play, and subsequently at 14:00 and 17:00. 

This measurement comprehensively considers several environmental variables, including ambient temperature, humidity, wind conditions, and the angle of the sun.

For best-of-three set matches, the rule applies after the second set. In best-of-five set matches, it applies after the third set. 

Players may leave the court during this break but are not permitted to receive coaching or medical treatment.

Impact on quality 

Chris Tyler, an environmental physiology researcher at the University of Roehampton, welcomed the heat rule but noted that the heat could negatively impact the quality of matches.

“It’s good that they have a rule that uses the Wet Bulb Globe Temperature but what it doesn’t factor in is what the players are doing,” Tyler was quoted in the Reuters report.

“Most of the heat risk for players relates to their actual body temperature increasing, 80% of their body temperature is related to what they’re doing.

He also suggested that applying iced towels to the back of the neck during changeovers might not be the most effective method for players to cool down.

“It’s like a football team giving a pain-killing injection to their star player before a cup final, it makes them feel better but the injury is still there,” he said.

He further said that if it was core body temperature that they wanted to bring down, the towels were not really going to do much. 

Tyler added that the feet and the forearms had a lot of blood vessels and cooling them down was quite a good method of heat exchange, and also the groin where they had the femoral artery.

Plans

Wimbledon organisers are implementing precautions to safeguard the general public and staff, including ball boys and girls (BBGs), against the anticipated heat, while elite players are expected to manage these conditions.

A club statement said:

Adverse weather is a key consideration in our planning for The Championships, and we are prepared for the predicted hot weather, with comprehensive plans in place for guests, players, staff and the BBGs.

Additional free water refill stations will be available throughout the grounds. Real-time weather alerts will be broadcast on large screens and published on the tournament’s website.

To combat the heat, staff shifts will be adjusted, and “shade-mapping” will be implemented to help people find respite from the sun.

Following Monday and Tuesday’s extreme heat, temperatures are forecast to fall to the low to mid-20s for the remainder of the week, with a likelihood of rain showers, according to the Met Office.

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The U.S. stock market is presently witnessing an extraordinary period, with the S&P 500 Index trading at all-time highs.

This remarkable rally has seen approximately $10 trillion added to the value of U.S. stocks since the index was on the verge of a bear market just two months prior.

This market buoyancy persists despite a multitude of looming risks, including President Donald Trump’s impending tariff deadline, ongoing geopolitical tensions in the Middle East, and increasing economic uncertainty.

Kate Moore, the recently appointed chief investment officer of Citigroup Inc.’s wealth division, articulated this sentiment in a recent interview with Bloomberg, stating, “If I’m honest, I’ve been a little uncomfortable with this rally.”

She highlighted a series of “warning flags” that, in her view, are not adequately impacting investor sentiment or receiving sufficient attention.

Emerging cracks and shifting expectations

A key area of concern, as identified by Moore, lies in the moderation of corporate earnings expectations.

At the beginning of the year, Wall Street analysts had projected a robust nearly 13% increase in profits for S&P 500 companies, according to data from Bloomberg Intelligence.

However, in less than six months, this forecast has been significantly revised downwards to a more modest 7.1%.

Concurrently, the composition of the stock market’s gains indicates a growing concentration around a limited number of companies.

While the standard S&P 500 Index continues its ascent, largely propelled by the strong performance of major technology entities such as Nvidia Corp., Microsoft Corp., and Meta Platforms Inc., its equal-weighted counterpart remains 3% below the record level it achieved half a year ago.

Moore, who assumed her role as CIO at Citi’s wealth business in February, after a tenure as head of thematic strategy for BlackRock’s $50 billion global allocation business, also voiced reservations about the market’s apparent dismissal of potential tariff impacts.

She further characterized the enthusiasm surrounding prospective interest rate cuts as potentially misplaced.

Policy uncertainty and economic headwinds

As President Trump’s self-imposed July 9 tariff deadline rapidly approaches with limited progress on trade deals, Moore suggests that investors might be underestimating the financial repercussions of these levies.

She underscored globalization’s significant role in the margin expansion observed over the past two decades, implying that companies will indeed experience the effects of new tariffs.

Furthermore, Moore cautioned against excessive optimism regarding interest rate reductions, explaining that such policy adjustments would likely stem from a response not only to cooling inflation but also to a broader deceleration in overall economic activity.

She emphasized that a “cooling overall activity is not the perfect environment for massive risk on.”

Wall Street analysts now anticipate that second-quarter year-over-year profit growth for S&P 500 companies will be the weakest in two years, projected at 2.8%, according to Bloomberg Intelligence data.

This economic softness is exemplified by FedEx Corp.’s recent warning of lower-than-expected profits for the current quarter, attributed to the ongoing impact of the trade war.

Additionally, economic data indicates that U.S. consumer spending in the first quarter experienced its slowest growth since the onset of the pandemic, driven by a sharp deceleration in outlays for various services.

Moore’s primary concern revolves around a lack of policy clarity, observing that “The longer that uncertainty lasts — the longer we have flip-flops on policy and wait-and-see mileposts keeps moving — the more that leads companies to pull back on some of the investment and capital expenditures and hiring.”

Strategic adjustments and enduring investment themes

Despite these broader economic apprehensions, Moore maintains a degree of confidence in the sustained strength of earnings within the artificial intelligence and technology sectors.

She notes that these investment themes have consistently demonstrated resilience across various economic cycles.

Moreover, even amidst a potentially deteriorating economic environment, she considers U.S. large-cap companies to be “the most attractive house on the street” in terms of available investment options.

Since joining Citi Wealth, Moore has initiated several strategic adjustments to the firm’s investment portfolios.

These changes include a reallocation of assets, shifting from small-cap companies to large-cap entities, a decision predicated on the expectation of a more challenging environment for smaller firms in terms of both growth prospects and profit margins.

She also disclosed the addition of gold to the portfolios, characterizing its inclusion as a “ballast” — a measure to provide stability and act as a hedge against market volatility.

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