January in review
Equity markets were broadly higher for the month, though returns varied across individual markets. In Canada, the S&P/TSX Composite Index rose 0.8%, led by Energy (+10.6%) and Materials (+8.9%), while Information Technology (-17.6%) weighed heavily on the index as investors grew more cautious that some tech companies may be overpriced. In the U.S., the S&P 500 gained 1.4%, with Energy (+14.4%) and Materials (+8.7%) leading. Canadian bonds rose 0.6%, while U.S. bonds increased 0.1% with central banks for both countries leaving key policy rates unchanged in January. Commodities were strong, led by crude oil (+14.0%) and natural gas (+39.1%). Emerging markets outperformed, led by strong gains in South Korea, as investors sought alternatives to U.S. equities and technology shares benefited from continued demand tied to artificial intelligence (AI).
Here are some of January's most notable events:
Weaker exports push Canada’s trade balance deeper into deficit. Canada’s merchandise trade balance widened to a $2.2 billion deficit in November 2025, from a $395 million shortfall in October, as exports fell 2.8% while imports edged down just 0.1%. The decline in exports was driven largely by weakness in metal and non-metallic mineral products, including a pullback in gold shipments, while trade with the United States softened for a second consecutive month. At the same time, imports from non-U.S. countries rose to a record high, further widening the overall trade gap and underscoring ongoing headwinds for Canada’s external sector, growth outlook, and currency.
Bank of Canada keeps rates steady amid easing inflation. On January 28, 2026, the Bank of Canada held its policy interest rate steady at 2.25%, in line with expectations. The Bank noted that inflation continues to move closer to its 2% target, supported by easing goods price pressures, while shelter and services inflation remain elevated. Economic growth has slowed amid weaker global demand and trade uncertainty. The Bank also highlighted that labour market conditions are softening, with the unemployment rate rising and wage pressures easing. Policymakers reiterated that future decisions will remain data-dependent, guided by inflation trends and broader economic conditions.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill (FTSE Canada 60 Day T-Bill) | 0.18 | 0.18 | 2.65 | 191.23 |
| Canadian Bonds (FTSE Canada Universe Bond) | 0.58 | 0.58 | 2.02 | 1,206.77 |
| Canadian Equities (S&P/TSX Composite) | 0.84 | 0.84 | 28.35 | 31,923.52 |
| U.S. Bonds (Bloomberg U.S. Aggregate Bond, US$) | 0.11 | 0.11 | 6.85 | 2,351.36 |
| U.S. Equities (S&P 500, US$) | 1.44 | 1.44 | 16.32 | 6,939.03 |
| Global Equities (MSCI World, US$) | 2.26 | 2.26 | 20.11 | 4,527.59 |
| Emerging Markets (MSCI Emerging Markets, US$) | 8.86 | 8.86 | 43.63 | 1,528.09 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | 0.82 | 0.82 | 6.82 | 0.7346 |
| C$/Euro (€) | -0.10 | -0.10 | -6.63 | 0.6198 |
| C$/Pound (£) | -0.78 | -0.78 | -3.32 | 0.5366 |
| C$/Yen (¥) | -0.48 | -0.48 | 6.49 | 113.714 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | 8.49 | 8.49 | 59.47 | 4,745.10 |
| Oil WTI ($/barrel) | 13.96 | 13.96 | -2.34 | 65.21 |
| Natural Gas ($/MMBtu) | 39.11 | 39.11 | 15.98 | 4.35 |
†Total Return, as at January 31 2026. Indices are quoted in their local currency.
Source: Bloomberg
Indices are not managed, and it is not possible to invest directly in an index.
Commodity markets rocked by volatility. Prices across major commodities experienced large daily and weekly price swings in January. Natural gas experienced the largest swing, rising 39.1% for the month as colder weather forecasts pushed demand higher. Copper gained 4.3%, supported by stronger global demand forecasts and potential supply disruptions. Precious metals experienced a sharp selloff following President Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair on January 30, with gold falling more than 9% in one day, its largest single-day drop since 1983 and silver tumbling more than 31%, its worst ever daily loss.
Did you know?
Crude oil prices rose 14.0% in January. At the start of the year, U.S. military forces captured Venezuelan President Nicolás Maduro in a large-scale operation and transported him to the United States to face federal charges, heightening geopolitical uncertainty. While Venezuela currently represents a relatively small share of global oil production, it holds some of the world’s largest proven oil reserves. As a result, potential changes to sanctions or control over its exports could influence oil flows, with possible implications for Canadian heavy oil producers.
Insights from our Portfolio Managers
The new year has brought no shortage of big stories and market headlines, but markets have kept moving steadily, powered once again by strong corporate earnings. As fourth-quarter results continue to roll in, the S&P 500 is on track for its tenth straight quarter of year-over-year earnings growth, highlighting how durable this profit cycle has been despite higher costs and ongoing uncertainty. Companies aren’t just making more money; they’re doing it more efficiently. Profitability remains supported by disciplined cost control and productivity gains from artificial intelligence. AI is no longer just a market story, it’s driving real operational advantages, making balance sheets stronger and businesses more competitive. And so, Information Technology remains the powerhouse of earnings growth… but concentration risk is still elevated, with now roughly 40% of the S&P 500 tied to just ten companies.
“Concentrated bets can work for a while, but they only have to be wrong once to cause real damage to a portfolio. Diversification doesn’t win every headline or every quarter, but over time it quietly does its job – and that’s where active management can help, tilting toward opportunity while keeping any single position from having too much impact on your long-term outcome.”
— Craig Maddock, VP & Senior Portfolio Manager, Head of Multi-Asset Management
