Global Index Performance

Indices	Month-to-date at June 30 2026	Year-to-date at June 30 2026
Canadian Bonds1	0.51%	2.24%
Canadian Large Cap Equities2	0.50%	11.17%
U.S. Large Cap Equities3	2.01%	14.07%
Developed Market Equities4	3.08%	13.69%
Emerging Market Equities5	1.59%	28.37%

Source: FactSet as of July 10, 2026.

Fixed Income*

The Bank of Canada held its overnight rate at 2.25% on June 10th and on July 15th, noting that Canadian economic activity remains weak, the labour market still has slack, and uncertainty around U.S. trade policy and the ongoing Iran conflict continues to cloud the outlook. Bond performance in Canada broadly tracked U.S. trends over the quarter, with yields elevated and curves relatively flat, as the Bank maintained a data-dependent, flexible posture amid uncertain inflation dynamics. Governing Council was explicit that policy could move in either direction: a further escalation in Middle East energy prices could force rate hikes, while new U.S. trade restrictions could just as easily tip the Bank toward cuts. South of the border, the Fed held the federal funds rate at 3.50%–3.75% on June 17th. Inflation expectations south of the border have been pushed higher by energy-price pass-through from the Iran conflict. Credit markets, meanwhile, have been supported by solid underlying economic growth and yields that remain relatively attractive.

Equities* 

Global equity markets delivered strong gains in Q2 despite continued geopolitical uncertainty. The S&P/TSX Composite advanced approximately 6.9% over the period and reached a series of record closing highs in June, led by strength in financials, alongside solid gains in health care and industrials. Materials told a more mixed story in June. The sector helped drive the index's early-month record highs on strong mining performance, but a stronger U.S. dollar weighed on gold prices later in June, leaving materials down for the quarter overall. Canadian equities nevertheless trailed the stronger performance of several overseas markets, partly reflecting the domestic index’s smaller exposure to the large technology companies that have benefited most from continued enthusiasm surrounding artificial intelligence. The S&P 500 and the Nasdaq both posted their best quarter since 2020. Technology shares weakened toward the end of June as investors reassessed elevated valuations. Market participation broadened further in June, with small-cap and cyclical companies participating alongside the mega-cap technology names that had previously dominated returns. International developed and emerging markets also produced strong results last month, benefiting from improved investor risk appetite and the resilience of global economic and corporate earnings expectations.

 

Market Outlook

The U.S.–Iran conflict and disruption around the Strait of Hormuz have contributed to oil-price volatility, but markets have so far absorbed the uncertainty reasonably well. Heading into the second half of 2026, investors face a mixed backdrop: Canadian growth remains subdued, central banks are balancing inflation and growth risks, and equity valuations are elevated in several popular areas. This supports a measured approach focused on diversification, valuation discipline and selective exposure to high-quality companies and bonds with durable fundamentals. Encouragingly, market leadership has begun to broaden beyond the largest technology names, creating a wider set of opportunities across sectors and regions. The key issues to watch through the third quarter will be developments in the Middle East, the outcome of CUSMA negotiations and the path of U.S. inflation and interest rates. Overall, the environment remains constructive, but it continues to reward patience and disciplined portfolio positioning.

*Data sourced from FactSet as of July 10, 2026. 

 

 

 

1. As measured by the FTSE Canada Bond Universe Index
2. As measured by the S&P/TSX Composite Total Return Index
3. As measured by the S&P 500 Total Return Index in CAD
4. As measured by the MSCI EAFE Total Return Index in CAD
5. As measured by the MSCI EM Total Return Index in CAD