Impact of Mark Carney’s Victory on the Financial Markets

The Liberal Party, led by Mark Carney, won the 2025 Canadian elections. Although the Liberals only managed a minority government, the results highlighted Canadians’ concern regarding US President Donald Trump’s threats to the nation’s economy and sovereignty. Carney’s focus on Canadian independence from America played a key role in the people’s choice. The 2025 election witnessed a record voter turnout of approximately 69% of registered voters, the highest in a decade.

What Led to the Liberal Party’s Victory?

Mark Carney’s message was clear and consistent. He would take on Donald Trump and fight the threat to Canada’s sovereignty and economy. This was especially apparent during his last rally, held at the US-Canada border against the backdrop of Ambassador Bridge, the key route for US-Canada trade. The impact was staggering, taking the Liberal Party from a low of 16% in the opinion polls at the beginning of 2025 to winning the election. 

A lot had to do with Trump’s tariffs, accusations of Canada’s role in the trafficking of fentanyl and suggestions that the country should become the 51st state of the United States. Carney emphasised the need to negotiate a win-win relationship with America, reminding the White House that Canada was the largest trade partner for 40 of the 50 states and a major supplier of energy. Given its vast reserves of critical minerals, Canada could be a reliable supplier to the US than many other countries.

In addition, the Liberal Party is focused on diversifying Canada’s strategic and trade alliances and defence partnerships.

How Will the Liberal Party Win Affect the Financial Markets

Given Mark Carney’s experience in global banking and finance, having served as the Governor of the Bank of Canada from 2008 and 2013, his expertise will stand Canada in good stead as the country copes with economic uncertainties and hostilities from its neighbour. Here’s a look at how his election as the Prime Minister could move the financial markets.

The Forex Market

Two months before the election, in February, the Canadian dollar (CAD) had fallen to its lowest against the US dollar (USD) since 2003 at $0.68. By the beginning of May, the Loonie was up 6.42% to $0.72. This was contrary to analyst expectations of a further weakening in the CAD due to rising trade tensions with the US. Even the Bank of Canada had forecasted that the currency would reach $0.71 only by the end of 2025 due to weak oil prices and US tariffs. Market optimism was one of the biggest drivers of the CAD strength between February and May. Potential policy changes and counter moves to the US tariffs, such as rate cuts and/or fiscal aid, boosted hope and confidence in the markets. A cooling US economy, which was likely limiting the strength of the greenback, also helped the Canadian dollar. Some reports also state that Carney’s win and the associated confidence of voters that he could stand up to Donald Trump better than Justin Trudeau also helped.

Any sustained recovery in commodity prices and stability of the Canadian economy could further strengthen the CAD.

The Stock Market

Another asset class that is likely to benefit from the Liberal Party’s victory is renewable energy stocks. Carney promised in his victory speech to “build Canada into an energy superpower in both clean and conventional energy.” This came at a time when these stocks were struggling due to Trump’s support of fossil fuels and distrust of renewable energy technologies. Plus, the US tariffs have led to declining oil prices, which has adversely affected oil stocks. Mark Carney’s stance on climate change and support of the net-zero goals are likely to prove positive for the renewables sector and stocks associated with it.

The new government is likely to support clean energy initiatives via tighter emission limits and increased subsidies, which could benefit stocks like Brookfield Renewable Partners, Northland Power and Algonquin Power & Utilities. These companies are also less vulnerable to trade wars due to their diversified assets and global exposure.

Traditional oil producers in Canada could benefit from China diversifying its imports away from the United States. In fact, the world’s leading importer of crude reduced its oil imports from the US by 90% in April while turning to Canada for its energy needs. This has led to Chinese imports from a Western Canadian pipeline surging to 7.3 million barrels in March, compared to 500,000 barrels in December 2024.

The Cryptocurrency Market

But do you know what Carney and Trump have in common? Both premiers support cryptocurrencies and wish to integrate them into mainstream finance. Carney’s deep financial knowledge and experience are likely to prove extremely useful in balancing financial stability and innovation as he looks to regulate the cryptocurrency market in Canada and support the development of a domestic Central Bank Digital Currency (CBDC).

However, Mark Carney has also stated that cryptocurrencies are likely to have specific use cases and can play a role in the economy only in combination with fiat currencies. At the same time, he believes that CBDCs could offer the benefits of cryptos while ensuring oversight and maintaining the stability of the traditional financial system. Carney plans to integrate digital currencies into the mainstream financial ecosystem to drive financial inclusion and fight monetary scams.

This could support the crypto markets and fuel the ongoing rally.

Capturing Market Opportunities

Given the uncertainties associated with the global economy, the ongoing tariff wars, changing trade policies and geopolitical tensions, it is important to keep a close eye on the latest economic and political developments. Honing your technical analysis skills is also crucial to identifying viable entry and exit positions, while ensuring that risk management measures are part of your trading strategy.

To Sum Up

• The Liberal Party won the Canadian elections, led by Mark Carney.
• Mark Carney’s strong stance on countering US tariffs and threats to Canada’s sovereignty and economy played a key role in his win.
• Carney’s experience in global banking and finance gives the market optimism regarding his policies to strengthen the Canadian economy.
• The Canadian dollar strengthened in the run-up to the elections.
• Renewable energy stocks are expected to benefit from Carney’s pro-renewables stance.
• Carney is also in favour of cryptocurrencies and CBDCs, which could support the crypto markets.

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