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Monthly Market Recap: May 2026

by | Jun 1, 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

by | May 1, 2026 |

Overview
April 2026 delivered the strongest monthly performance for U.S. equities since November 2020. The S&P 500 gained 10.4% and the Nasdaq surged 15.3%, driven by a sharp relief rally following the announcement of a ceasefire between the United States and Iran on April 8. Markets quickly moved away from worst case scenarios surrounding the Strait of Hormuz, despite the fragile nature of the truce and continued oil volatility throughout the month. Equities instead focused on a very strong earnings season and a broad return in risk appetite. Small caps gained more than 10%, developed international markets rose 7.4%, and the TSX also finished higher despite a consolidation phase in Energy following its March rally.
U.S. Market Performance & Policy
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.
Key U.S. Economic Data
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 Markets & Iran Conflict
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.
Canadian Market Update
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.
Outlook
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.

Monthly Market Recap: March 2026

by | Apr 2, 2026 |

Overview
March 2026 delivered the worst monthly performance for U.S. equities since September 2022. The S&P 500 lost 4.98%, the Nasdaq posted a similar decline, and all major global indices finished negative. The dominant driver was energy: U.S. and Israeli strikes on Iran launched February 28 triggered closure of the Strait of Hormuz, sending Brent crude surging past $120 per barrel before settling near $113 by month end, a 55% increase from pre conflict levels. Canadian equities proved more resilient given the country’s resource exposure. Both central banks held rates unchanged, each confronting the same dilemma: softening growth alongside reaccelerating inflation.
U.S. Market Performance & Policy
The S&P 500 broke below its 50 day moving average on February 27 and its 200 day on March 19. Energy was the clear outperformer as oil names surged with crude, while technology, consumer discretionary, and financials bore the brunt of the selloff as higher for longer rate expectations were repriced sharply upward.
The Fed held at 3.50% to 3.75%. Markets priced virtually no probability of a cut at the April 28 and 29 FOMC meeting and a 77.5% chance of no movement through year end. The era of anticipated cuts has given way to a hawkish holding pattern, with the March CPI print, which is expected to show annual inflation approaching 3.4%, set to confirm the trend.
Key U.S. Economic Data
Federal funds rate: Held at 3.50% to 3.75%. Rate hikes, while not the base case, are no longer off the table. Payrolls: +178,000 in March, well above the 60,000 consensus and a sharp reversal from February’s revised loss of 133,000. Unemployment edged down to 4.3%. Health care led with 76,000 jobs, partly reflecting the return of Kaiser Permanente strike workers. Federal government payrolls fell another 18,000.
CPI: February held at 2.4% headline / 2.5% core. March expected at ~3.4% as the oil shock flows through. ISM Manufacturing: Rose to 52.7; Prices Paid surged to 78.3, a four year high. ISM Services: Slipped to 54.0 from 56.1, remaining in expansion. Prices Paid soared to 70.7, the highest since October 2022, on surging fuel, lumber, copper, and steel costs.
Canadian Market Update
The TSX outperformed U.S. peers, anchored by Energy and Materials, the two sectors most directly benefiting from the oil surge. Gold continued to attract safe haven capital, providing further cushion to Materials even as broader sentiment deteriorated.
The Bank of Canada held at 2.25% on March 18, citing weaker than expected near term growth, an unemployment rate of 6.7%, and February CPI of 1.8%. The BoC flagged that rising energy prices will push inflation higher in coming months, keeping a rate hike on the table. The next decision is April 29, 2026.
Outlook
The Iran conflict has introduced a genuine stagflationary risk vector that is unlikely to resolve quickly. For Canada, the energy windfall provides a structural buffer, though rising fuel costs weigh on consumers and import dependent businesses simultaneously. The current environment favors energy producers, defence and aerospace, commodity linked industrials, and investment grade fixed income. Discipline is warranted on high multiple growth, rate sensitive real estate, and consumer discretionary names.