Wall Street will be closely watching the action in Ottawa next Monday.
And no, it has nothing to do with the Stanley Cup playoffs.
Canadian voters will be heading to the polls on April 28 to decide which party should govern the country amid an ongoing trade war with the US and President Trump's repeated jeers about making Canada the 51st US state. Trump has mandated 25 percent across-the-board tariffs on goods from America’s neighbor to the north, with an exemption on products covered by the USMCA, a North American free trade deal.
The election pits Liberal leader and former UK central banker Mark Carney against Conservative leader Pierre Poilievre. Carney, for his part, has pushed his party as the best option to oppose Trump and his tariffs.
"Pierre Poilievre has no plan to stand up to President Trump," Carney told a crowd on Tuesday.
A conservative politician in the classic sense, Poilievre seemed ready to cruise to victory in January when Liberal party leader Justin Trudeau resigned due to a lack of confidence, elevating Carney to the Prime Minister position. At the time, Poilievre and the Conservatives enjoyed a lead of more than 20 percentage points over the Liberals.
Since then, however, Carney has more than made up the deficit. The Liberals now lead the race by approximately 5 percentage points at the polls, primarily due to his tougher stance against Trump.
As for the financial impact of the friction between the former friendly neighbors, Canada seems to be getting the better of the situation, at least in market terms.
Helped along by the so-called "sell America trade," the iShares MSCI Canada ETF (Ticker: EWC) is up 3 percent year-to-date and 11 percent over the past 12 months. The S&P 500, by comparison, is down 10 percent in 2025 and up 5.5 percent over the past year.
The EWC is also benefiting from the recent outperformance of financial stocks, especially international ones. The EWC is dominated by bank stocks with Royal Bank of Canada (7.5 percent), Toronto-Dominion Bank (5 percent), Bank of Montreal (3.3 percent) and Bank of Nova Scotia (2.7 percent) among the ETF's top 10 holdings.
Jim Thorne, chief market strategist at Wellington-Altus, agrees that the successful strategic pivot by the Liberal Party in replacing Trudeau with Carney has been the story of the election thus far. Nevertheless, Thorne believes Canadian voters, and most certainly market-participants, are wary of another four years of Trudeau-style, extreme left policies.
“If Carney is elected and follows through with a Trudeau like agenda, then sell Canada. Global investors will not find Canada attractive under a Trudeau type economic regime which it looks like Carney will continue,” Thorne said, adding that if Canada moves back to the center then global capital should return to the country, heralded by a “relief rally.”
Sector-wise, Thorne is a fan of mining and pipeline plays, pointing out that the US needs Alberta's oil and Trump wants the Keystone pipeline built. Still, he said he "can’t emphasize enough" that if Carney gets into power then the country's natural resources will not get developed.
Elsewhere, Chris McMahon, CEO at Aquinas Wealth Advisors, holds little doubt that the Canadian election will have real effects on the US stock market, trade, currency, and overall economic confidence. He agrees with Thorne that a Canadian government perceived as “more protectionist or confrontational” could increase uncertainty, which typically weighs on investor sentiment and drives US stock market volatility.
He also believes the election’s impact on the Canadian dollar is real, as currency fluctuations affect the US-Canada trade competitiveness. If Canadian buying power is impacted, so will their ability to buy US goods. Market expectations of fiscal and monetary policy changes post-election could also cause volatility, according to McMahon.
“A weakening Canadian dollar might benefit some US exporters but could also reflect broader economic concerns,” McMahon said.
Considering the thin margin between the candidates, McMahon also has concerns over a potentially gridlocked government should the election prove overwhelmingly close.
“The election is expected to be close, possibly resulting in a minority government and legislative gridlock, which could prolong uncertainty. Political uncertainty leads to cautious investor behavior, potentially increasing volatility and reducing market momentum,” McMahon said.
Moving on, Andrew Buntain, portfolio manager at Fiduciary Trust Canada, believes both Carney and Poilievre have articulated pro-business policies, including tax reduction and development of natural resources. Furthermore, he said both are also championing the impetus to take down inter-provincial trade barriers.
When it comes to stocks, he said the Canadian equity market remains undervalued relative to the US market, even though it was not spared the fallout after the April 2nd “Liberation Day” announcement.
“Generally, Canadian stocks pay superior dividends, and belong to stable sectors like financials, utilities and communications,” Buntain said.
Moreover, Buntain believes Canadian miners will continue to benefit from the surge in gold prices, which have rallied due to the uncertainty over Trump’s trade plans.
“Demand for gold typically increases during periods of global trade and geopolitical uncertainty. Canada is a market known for its abundance of natural resources, including gold,” Buntain said.
Finally, Bryan Bibbo, president of JL Smith Holistic Wealth Management, warned that next week’s election could send ripple effects through global markets, especially in the short term, due to Canada’s place as the world’s tenth-largest economy. As a result, any shift in political leadership or fiscal direction could influence everything from oil prices to trade relations and even the strength of the Canadian dollar.
“If the Liberal Party, led by Mark Carney, is elected, we may see policies that focus on strengthening Canada’s economic resilience through domestic infrastructure investment, clean energy initiatives, and a steady approach to international trade. These moves tend to support market stability and may be seen as a continuation of the current economic trajectory,” Bibbo said.
Finished Bibbo: “If the Conservative Party under Pierre Poilievre wins, markets may brace for a faster shift, more aggressive energy expansion, tax reductions, and deregulation. That could boost short-term growth sentiment but also introduce questions about long-term environmental commitments and fiscal discipline.”
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