Markets ‘exhausted’ by tariff talk, with the worst likely behind them, says analyst

Nate Thooft, CIO and senior portfolio manager at Manulife Investment Management, joins BNN Bloomberg to discuss the markets amid tariff uncertainty.

The constant battle over tariffs in the last year has “exhausted” stock markets, which are looking forward to see big wins in technology earnings and metal prices this year, according to a market analyst.

The current environment shows that markets are not seeing a major upside or downside in stocks, says Nate Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management.

“I think that’s what the market is looking through to say, ‘Hey, we’ve seen the worst case scenario. We’re not visiting those high levels of ultimate tariff levels,’” says Thooft.

With the U.S. Supreme Court recently striking down U.S. President Donald Trump’s sweeping tariffs under the IEEPA Act, and the possibility of renegotiating or implementing an additional 15 per cent tariff, the level that will actually be priced into the market is lower than what investors expected at the start of the year, says Thooft.

‘Lofty expectations’ from Nvidia

Thooft says expectations from AI companies are really high, with Nvidia representing five per cent of the global equity market and serving as a major indicator of what capital expenditure looks like.

“They have lofty expectations,” said Thooft.

‘Greater concerns about longer-run inflation levels’

Thooft says investors are now more reluctant to hold longer-term government debt.

He says that with central banks lowering rates, it impacts the short end of the yield curve, which includes bonds due over the next couple of years.

If you look at the longer end of the yield curve, he says, there are greater concerns about longer-run inflation levels.

“There’s greater concerns about fiscal spending and debt levels,” says Thooft.

He says there is going to be a steepening of the yield curve and, as a result, investors should focus on their fixed-income portfolios.

U.S. profit growth ‘biggest tailwind’

Strong U.S. corporate profit growth is emerging as the biggest support for equity markets this year, despite persistent geopolitical risks and trade tensions.

“This is the biggest tailwind in the markets right now,” said Thooft.

Underlying earnings are expected to grow by more than 10 per cent year over year across most major regions, he said adding that emerging markets could see earnings growth of 15 to 20 per cent on a broad index basis.

“So we’re seeing a pretty broad array of both countries, sectors and companies participating in upside when it comes to earnings growth in 2026,” said Thooft.

Concerns about oil and gas

Thooft says geopolitical dynamics are concerning when it comes to oil, particularly the situation in Iran, which is significantly affecting global oil markets by driving prices higher through a “risk premium.”

“Which is the rise you’ve seen over the last month or so,” says Thooft.

“But there is a potential, particularly if supply is cut off further, oil prices could go up even more, and that’s a risk we have to think through.”

Optimistic about precious metals

Aside from oil and gas, the other focal area for geopolitical risk this year is precious metals, says Thooft.

“We like them a little bit more than we did,” said Thooft.

He says geopolitical uncertainty is expected to provide strong support for precious metals, like gold and silver.

“When we look at the pillars that drive gold prices, everything from inflation, uncertainty, geopolitical concerns, debasement of fiat currencies, things like that, those are all still flashing green in our view,” says Thooft.

“So generally speaking, the drivers that have driven gold to the levels that we’re already at, they’re continuing to be in place.”