Q1 2026 Market Summary

The first quarter of 2026 centered heavily around geopolitical volatility. The start of the year commenced with the most successful regime change when the U.S. captured Nicolas Maduro out of Venezuela. Maduro’s VP, Delcy Rodriguez, quickly established an agreement changing the loyalty of Venezuela from Russian/China to the U.S. In return Venezuela had sanctions removed and will provide the U.S. insight and oversight into their energy sector.

For reference in recent years the U.S. has transitioned into the world’s largest producer of crude oil. Due to years of U.S. led sanctions on Venezuela, They were 20^th in global production. * Visual Capitalist

As per the illustration Venezuela has by far the world’s largest reserves. With recent inflows from the U.S. to develop the Venezuelan energy sector it is expected that we are experiencing a drastic change in the future of global energy control. Secondly due to Canada’s inability to open B.C. and Quebec for pipeline development, the majority of energy development in Canada drives sending additional crude oil to the U.S. for refinement. The combination of these two items place a large amount of global energy control with the U.S. administration.

The combination of success in Venezuela plus increasing control over global energy likely added to the U.S. confidence to resolve their long-standing aggression with Iran. These geopolitical issues/impacts on the energy sector have had wide impacts on global markets.

While Canadian equities posted solid gains on the back of surging commodity prices, U.S. markets pulled back as technology and growth stocks faced headwinds. The S&P/TSX Composite advanced approximately 3.3% amid strength in energy and materials sectors, which benefited from elevated commodity prices. Financials and industrials provided additional support. The 10-year Government of Canada yield ended the quarter near 3.44%.

The Bank of Canada (BoC) held its policy rate steady at 2.25% at both its January and March meetings. This pause reflects a balanced approach amid moderating core inflation pressures and excess supply in the economy, even as headline inflation ticked higher due to energy costs from the recent Iran conflict. Canadian CPI rose to 2.4% year-over-year in March (up from 1.8% in February), driven primarily by higher gasoline prices linked to global energy market disruptions. * Bank of Canada StatCan CPI.

Ongoing trade uncertainties around CUSMA and potential new tariffs continue to weigh on the outlook. Ontario continued to face elevated unemployment amid ongoing uncertainty related to U.S. tariffs and slower hiring in trade-sensitive sectors such as manufacturing. Recently failure to find a new trade deal has resulted in Ontario seeing unemployment increase to 7.6%. * ⁠150.statcan.

Canada and the U.S. economies showed a clear divergence in Q1. While unemployment and increasing cost of living is seen as a negative, Canada has benefited from its resource-heavy composition as oil and metals rallied on geopolitical tensions, while the U.S. faced broader pressure from technology sector rotation and AI-related valuation concerns. * RBC Wealth Management.

U.S. markets saw the S&P 500 fall 4.6%, with the Nasdaq declining 7.1% on technology weakness. These moves were shaped by rising energy prices, a rotation out of mega-cap tech, and ongoing uncertainty around trade policy and inflation. However, corporate earnings remained solid, with analysts expecting approximately 89% of S&P 500 companies to beat estimates and Q1 earnings growth tracking +13.2%. Energy and materials were standout performers while small-caps and equal-weight indices showed relative strength. In his March press conference, Federal Reserve Chair Jerome Powell noted that economic activity continues to expand at a moderate pace while acknowledging elevated uncertainty from energy markets and trade policy. * Fidelity Investments. Overall, markets continued to reward diversification and quality amid shifting sector leadership.

In the U.S., the Federal Reserve held the federal funds rate steady in the 3.50%–3.75% range through its March meeting. No rate cuts materialized in Q1 as officials cited elevated inflation risks and resilient economic activity. Projections continue to point to modest easing later in 2026. U.S. core PCE inflation remained around 3.0% while headline measures rose on energy. Tariff effects and higher oil prices have kept inflation above the Fed’s 2% target in the near term, though longer-run forecasts suggest gradual moderation. * Federal Reserve.

Lower borrowing costs from prior rate cuts have supported asset prices, but recession odds have edged higher amid geopolitical risks. Infrastructure spending and AI productivity gains remain positive offsets, while consumers have shown resilience despite higher energy costs.

Q1 2026 reminded investors that markets can rotate quickly in response to geopolitical events. With corporate fundamentals still strong and diversification proving its value once again, the months ahead may offer selective opportunities for those focused on quality and long-term positioning. We are here to support you in achieving your financial goals. If you require any assistance or have any questions, please do not hesitate to reach out to Cliff, Mario, Mark, or our TSG team.

The opinions expressed are those of the author and not necessarily those of CI Assante. Wealth Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances. CI Assante Wealth Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. The opinions expressed are those of the author and not necessarily those of CI Assante Wealth Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances. CI Assante Wealth Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.