Tech tax scrapped in Canada, benefiting big tech stocks like Alphabet, Meta Platforms, and Amazon

From Morningstar: 2025-06-30 08:57:00

The Morningstar US Market Index rose 3.4% last week, with large growth stocks leading gains. Valuation gaps between large and small companies continue to widen, offering opportunities for selective investors. Check out Ricky Williamson’s article for tips on using valuation in investing.

Canada scrapped a tech tax on US firms, boosting the communications sector by 6.1%. President Trump suspended trade talks with Canada due to the tax. Index heavyweights like Alphabet, Meta Platforms, and Amazon.com benefited, driving the consumer cyclical sector’s growth.

US energy stocks fell 3.3% after a ceasefire between Israel and Iran led to a 14.8% drop in crude oil prices. Despite this, energy stocks remain 4.3% higher for the month and are now priced below fair value. Overseas stocks rose, with the US dollar falling 1%, offering opportunities for investors.

Longer-dated Treasury bond yields fell, raising questions about their diversification powers. Demand for Treasuries when equity prices rise challenges their role as a risk-free asset. Clarity in asset selection is crucial, as Treasuries may not always provide the diversification benefits investors expect.

Inflation remains above expectations at 2.7%, likely leading the Federal Reserve to maintain interest rates in July. Expectations of two quarter-point cuts before year-end remain, with the first expected in September. Nonfarm payrolls report is awaited for potential market volatility during the July 4 holiday.



Read more at Morningstar: Tax Reprieve Boosts Big Tech Stocks