Q2 2026 Market Summary

The second quarter of 2026 marked a clear shift from the geopolitical volatility that defined the opening months of the year. Following the U.S. capture of Nicolás Maduro in early January and the subsequent realignment of Venezuelan energy interests under Delcy Rodríguez, American companies including Chevron and Shell advanced meaningful investment and production agreements. Venezuelan oil output and exports rose steadily through the spring, contributing to increased global supply expectations. (Woodmac)

At the same time, the United States and Iran entered a Memorandum of Understanding that helped de-escalate tensions and normalize key oil transport routes. Crude prices, which had spiked sharply in Q1 amid the earlier conflict, declined substantially by quarter-end. This moderation in energy costs provided measurable relief to inflation metrics and consumer budgets.

Canada’s resource-oriented equity market navigated the transition with relative resilience. While pure energy names faced headwinds from the pullback in oil prices, broader strength across materials, financials, and industrials supported overall advances. The S&P/TSX Composite posted further gains for the quarter (approximately +6.4%). The 10-year Government of Canada yield ended the period near 3.35–3.38%. (Bank of Canada)

The Bank of Canada held its policy rate steady at 2.25% at both its April and June meetings (and again in mid-July). This consistent stance reflected moderating core inflation pressures alongside the residual effects of the earlier energy-price spike. Canadian CPI rose mid-quarter, peaking at 3.2% year-over-year in May on elevated gasoline costs, before easing to 2.8% in June as fuel prices retreated following the normalization of Middle East supply. Core measures tracked by the Bank moved lower, reinforcing the decision to remain on hold. (Statcan)

Ontario’s labour market showed meaningful improvement. Unemployment, which had reached higher levels earlier in the year amid trade uncertainty and softer hiring in manufacturing, declined to 7.0% by May and held at that level in June—the lowest reading since late 2024. The national unemployment rate eased to 6.5–6.6%. While CUSMA-related trade uncertainties and potential tariff effects remain watchpoints, the sharper divergence with the U.S. economy that characterized Q1 narrowed as American markets recovered strongly. (Ontairo)

U.S. equities staged a powerful recovery after the turbulent first quarter. The S&P 500 advanced approximately 15% in Q2, while the Nasdaq Composite rose roughly 21–26%, marking one of the strongest quarterly periods in recent years for both indices. Technology and AI-related themes led the advance after the Q1 rotation and valuation concerns; semiconductors and hyperscalers were particular standouts. Energy was the clear laggard within the S&P 500, declining roughly 13–14% as oil prices retreated. Corporate earnings remained robust, with Q2 year-over-year growth tracking strongly and expectations continuing to rise through the quarter. (SeekingAlpha)

The Federal Reserve held the federal funds rate steady in the 3.50%–3.75% range through its June meeting. No rate cuts materialized in Q2. Officials balanced resilient economic activity and the earlier energy-driven inflation impulse against the clearer geopolitical path and moderating commodity prices. Projections continued to point to possible modest policy adjustments later in 2026, though the balance of risks kept the Committee patient. (CNBC)

Lower energy costs from the mid-quarter oil decline offered tangible relief to consumers and helped bring headline inflation metrics lower. Infrastructure spending, ongoing AI productivity investment, and solid corporate balance sheets remained constructive offsets. Recession odds, which had edged higher during the Q1 geopolitical spike, receded as markets re-priced risk more optimistically.

Q2 2026 reminded investors that markets can recover sharply once geopolitical uncertainty begins to clear. With corporate earnings momentum intact—particularly in technology and quality growth—and diversification again proving its value across Canadian resources and U.S. leadership, the months ahead may continue to 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.