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Monthly Market Recap: June 2026
Overview
June 2026 marked a decisive inflection point for global markets, driven by two major catalysts: a preliminary ceasefire framework between the United States and Iran signed on June 18, and the first FOMC meeting under Chair Kevin Warsh. The S&P 500 declined approximately 1.1 percent on the month, ending nine consecutive weeks of gains. Volatility remained elevated as markets navigated between the fragile de escalation of regional conflict and a meaningfully more restrictive signal from the Federal Reserve.
U.S. Market Performance and Policy
The FOMC voted unanimously (12 – 0) to maintain the federal funds rate at 3.50 percent to 3.75 percent, marking Kevin Warsh’s first meeting as Fed Chair. The statement was dramatically shorter than prior communications, removing forward guidance and focusing strictly on the committee’s dual mandate goals. The most significant signal came from the dot plot: the median rate projection for year end 2026 was revised upward to 3.8 percent from 3.4 percent in March, with nine of 18 officials anticipating at least one rate hike before year end. Bond markets reacted by pushing two year Treasury yields to their highest level in over a year, while the S&P 500 fell 1.06 percent on the day of the decision. Markets are now pricing in a potential first hike as early as October 2026.
Key U.S. Economic Data
May CPI rose 4.2 percent year over year and 0.5 percent month over month, its highest annual reading since May 2023, with energy accounting for over 60 percent of the monthly increase. Core CPI came in at 2.9 percent annually, with limited broad based pass through from energy into other components. Nonfarm payrolls again defied expectations with 172,000 jobs added in May, while the unemployment rate held steady at 4.3 percent. The FOMC’s updated projections raised the 2026 PCE inflation forecast to 3.6 percent, a 0.9 point upward revision from March, while slightly lowering the GDP growth outlook to 2.2 percent.
Oil Markets and Geopolitical Developments
June represented a complex turning point for energy markets. Brent crude peaked near 120 dollars per barrel at the height of the Iran conflict before retreating through mid month. On June 18, the United States and Iran signed a memorandum of understanding providing for the reopening of the Strait of Hormuz and the lifting of the naval blockade. While WTI briefly traded near 70 dollars per barrel, late month skirmishes in the Strait underscored the instability of the peace framework. Partial normalization of oil flows provided some relief, yet residual damage to energy infrastructure sustains an elevated risk premium for the foreseeable future.
Canadian Market Update
The Bank of Canada held its overnight rate steady at 2.25 percent for a fifth consecutive meeting on June 10, noting limited evidence of broad based pass through from higher energy prices to other consumer prices. The central bank signaled it would not allow elevated energy costs to become persistent inflation, while standing ready to respond as needed. The TSX posted year to date gains of approximately 8.7 percent through early June, outperforming the S&P 500 over the same period. Gold sector weakness weighed on Canadian mining names mid month, partially offset by continued strength in the energy sector.
Outlook
The Iran crisis reduced the extreme tail risk that had weighed on markets since February, but has not resolved the underlying inflation challenge. The Warsh Fed has established a new communication regime, shorter, more direct, with no declared policy bias, that markets will need to recalibrate to over time. With nine FOMC members signaling a potential hike by year end, the trajectory of U.S. interest rates remains the primary risk factor for risk assets in the second half of 2026. The June CPI release on July 14 and the Bank of Canada’s next decision on July 15 represent the immediate focal points for investors.
Monthly Market Recap: May 2026
Overview
May 2026 was another strong month for global equities, with the S&P 500 advancing approximately 5.3% as investors built on the momentum established during April’s rally. Market sentiment remained supported by resilient corporate earnings, continued investment in artificial intelligence infrastructure, and generally stable economic conditions. While geopolitical developments and energy markets remained sources of uncertainty, equity markets largely maintained their upward trajectory throughout the month.
U.S. Market Performance & Policy
Technology remained a key driver of U.S. equity performance, supported by ongoing demand for AI-related infrastructure, semiconductor investment, and strong earnings from large-cap growth companies. Investor attention was also focused on monetary policy developments. On May 13, 2026, the Senate confirmed Kevin Warsh as Chair of the Federal Reserve by a vote of 54–45. Market participants are now looking ahead to the June 16–17 FOMC meeting, where updated economic projections and an interest rate decision will be released. Despite elevated inflation readings, financial markets continue to expect a relatively cautious policy approach from the Fed.
Key U.S. Economic Data
Inflation remained above the Federal Reserve’s long-term target. April CPI increased 3.8% year over year and 0.6% month over month, while core CPI rose 2.8% on an annual basis. The data suggest that underlying price pressures remain persistent despite the significant monetary tightening cycle of recent years. Labor market conditions remain relatively stable, although real average hourly earnings declined 0.2% year over year, indicating some pressure on household purchasing power. Corporate earnings were generally constructive during the first-quarter reporting season, helping to support investor confidence.
Oil Markets & Geopolitical Developments
Oil markets experienced elevated volatility throughout May as investors reacted to shifting geopolitical developments and changing expectations for global supply and demand. Price movements were influenced by ongoing tensions in the Middle East, uncertainty surrounding global economic growth, and evolving market expectations regarding future energy demand. While geopolitical headlines continued to affect short-term sentiment, broader market participants remained focused on the implications of energy prices for inflation and monetary policy.
Canadian Market Update
The TSX delivered a generally positive performance during May despite continued uncertainty surrounding global trade conditions and commodity markets. The Bank of Canada maintained its policy interest rate at 2.25%, reflecting a cautious approach as inflation continues to moderate. Economic growth remains subdued, and labor market conditions have softened compared with previous years, although policymakers continue to expect inflation to gradually move toward target over the medium term. Investors are closely monitoring upcoming economic releases and future Bank of Canada communications for signals regarding the direction of monetary policy.
Outlook
Market resilience during May reflected continued confidence in corporate earnings, particularly in sectors benefiting from artificial intelligence investment and digital infrastructure spending. However, several challenges remain. Inflation continues to run above central bank targets, real wage growth remains under pressure, and geopolitical uncertainty could contribute to renewed volatility in commodity and financial markets. While technology and AI-related themes continue to attract investor interest, market participants will be watching upcoming inflation data, central bank decisions, and economic growth trends closely as the second half of 2026 approaches.
Monthly Market Recap: Avril 2026
Nine of the eleven S&P 500 sectors finished April higher, with growth stocks clearly leading the market. Communication Services gained 18.5% and Information Technology advanced 17.5%, supported by continued artificial intelligence spending and strong earnings from the Magnificent 7. In contrast, Energy declined 3.5% after its major March rally, reflecting profit taking and sector rotation, though it remained the top performing sector year to date at +33.5%. The Federal Reserve held rates steady at 3.50%–3.75%. Jerome Powell’s final meeting showed significant internal division, with an 8–4 vote split, the largest dissent since 1992. Several members challenged the assumption that rate cuts remain the base case, signaling a more hawkish tone. Markets now expect no rate cuts in 2026, with the first reduction pushed toward late 2027.
Interest rates remained unchanged at 3.50%–3.75%, while March inflation accelerated to 3.3% year over year, including a monthly increase of 0.90%, the largest since 2021. Core inflation came in at 2.6%. ISM Manufacturing remained stable at 52.7 and ISM Services declined slightly while staying in expansion territory. Unemployment edged down to 4.3%. First quarter earnings significantly exceeded expectations, with more than 80% of S&P 500 companies beating forecasts. Earnings growth reached 27%, led by the Magnificent 7 at +61%, compared to 16.4% for the rest of the index.
Oil experienced an extremely volatile month. The announcement of a temporary reopening of the Strait of Hormuz on April 17 caused crude prices to fall more than 10%, before rebounding sharply following renewed military tensions on April 20. Brent crude reached a peak of $126.41 on April 28 before stabilizing near $115. Commercial traffic through the Strait remained far below pre conflict levels, while average U.S. gasoline prices climbed to $4.48 per gallon from $2.98 before the war. Oil therefore ended the month elevated and unstable, with no clear resolution in sight.
The TSX slightly underperformed in April after outperforming in March, weighed down by Energy consolidation as global capital rotated back toward U.S. technology names. Energy and Materials nevertheless remained the best performing TSX sectors year to date, supported by elevated oil prices and continued strength in gold amid geopolitical uncertainty. The Bank of Canada held its policy rate at 2.25% on April 29 for a fourth consecutive meeting. The Bank highlighted moderate economic growth, energy driven inflation pressures, and a cautious approach toward the risk of persistent inflation. The next rate decision is scheduled for June 10, 2026.
April’s rebound remains strong but depends on several fragile assumptions: geopolitical stabilization, a lasting reopening of the Strait of Hormuz, and containment of energy driven inflation. Oil futures remain above $80 for late 2026, maintaining structural inflationary pressure. The Fed’s increasingly hawkish tone, leadership transition, and broader macroeconomic uncertainty continue to raise overall market risk. The environment remains supportive for earnings and artificial intelligence related investment in the short term, though selectivity remains critical. Energy, defence, aerospace, and AI infrastructure remain favored sectors, while caution is still warranted toward consumer discretionary and rate sensitive assets.