Market Update: Canadian economy shrank to end 2025 – Full Analysis

Here are five things you need to know this morning

Canadian economy shrank to end 2025

The Canadian economy ended 2025 on a softer note as a sharp decline in business inventories drove down real gross domestic product by an annualized 0.6 per cent in the fourth quarter. The decline in business inventories was partially offset by increased household spending, exports and government capital spending. A preliminary estimate from StatsCan suggests real GDP remained unchanged in January, after increasing by 0.2 per cent in December on a monthly basis.

Carney lands in India

Prime Minister Mark Carney has landed in India, where he will continue his government’s ongoing efforts to reset a fractured diplomatic relationship with Prime Minister Narendra Modi’s government. Carney and Modi are each looking to decrease their countries’ dependence on trade with the United States under President Donald Trump. There are reports Canada and India will announce a large-scale energy agreement that could include oil and gas as well as uranium.

China halting Canada canola tariffs

The Chinese government says it will begin halting tariffs on Canadian canola starting next week. The move comes after Prime Minister Carney’s visit to China in January, where a deal was discussed to drop tariffs on canola, peas, lobster and crab, in exchange for Canada cutting tariffs on Chinese EVs. However, how far those tariffs will fall is still uncertain, with Carney hinting they could drop by around 15 per cent, though final details have not been confirmed.

Netflix drops Warner Bros bid

Shares of Netflix and Paramount Skydance traded higher in the pre‑market, after Netflix officially backed out of its bid to acquire Warner Bros Discovery. The move follows Paramount raising its offer to 31 dollars a share, a proposal Warner’s board has now declared superior. Netflix says the nearly US$111B deal is no longer financially attractive. Among the questions raised by the takeover is the future of CNN, and whether it will be combined with CBS News, and how that might affect its content.

The US$60B startup challenging Lockheed Martin

Investors are watching how defense spending is shifting toward software and autonomy. BNN Bloomberg contributor Jon Erlichman breaks down Anduril, the $60-billion startup challenging Lockheed Martin, and explains what its growth and reported IPO could mean for the market.