May in review
Global equity markets posted gains in May despite ongoing geopolitical tensions and market uncertainty. Canadian equities rose 2.5%, led by Communication Services (6.9%) and Materials (6.2%), while U.S. equities gained 5.3%, driven by Information Technology (16.0%) and Consumer Discretionary (2.6%). Bond markets also posted gains, with Canadian bonds rising 1.4% and U.S. bonds increasing 0.3%. Commodity performance diverged, with oil declining 11.9% during the month. Gold fell approximately 1.5%, while natural gas rose approximately 8.1%. Emerging markets stood out, with gains led by Asia as optimism around potential U.S.-Iran negotiations supported regional equities, while Japan’s Nikkei 225 and South Korea’s KOSPI Composite surged approximately 28.5% to record highs, driven by strong performance in technology stocks.
Here are some of May's most notable events:
Canada’s economy slips into a technical recession. Canada’s gross domestic product declined by 0.1% on an annualized basis in the first quarter of 2026, contrasting with expectations for a 1.5% expansion. Fourth-quarter 2025 growth was revised lower to a 1.0% contraction, placing the economy in a technical recession. Higher imports weighed on overall growth during the period, while rising business inventories indicated an accumulation of goods across sectors. Business and government capital investment declined, contributing to the contraction, while household spending increased and provided some support, particularly through goods and services consumption, to overall economic activity.
Canada employment weakens while U.S. labour market shows steady gains. In Canada, employment was little changed in April, declining by 18,000 (-0.1%) jobs, bringing the total decline to 112,000 (-0.5%) over the first four months of 2026. The unemployment rate rose to 6.9% as more people searched for work, while the employment rate edged down to 60.5%. In the U.S., nonfarm payrolls rose by 115,000, led by gains in health care, transportation and retail with job openings falling to 6.87 million in March as hiring picked up. The unemployment rate held at 4.3%, with broader labour market conditions largely unchanged.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill (FTSE Canada 60 Day T-Bill) | 0.19 | 0.90 | 2.45 | 192.60 |
| Canadian Bonds (FTSE Canada Universe Bond) | 1.36 | 1.72 | 2.99 | 1,220.45 |
| Canadian Equities (S&P/TSX Composite) | 2.52 | 10.65 | 36.12 | 34,769.14 |
| U.S. Bonds (Bloomberg U.S. Aggregate Bond, US$) | 0.31 | 0.38 | 5.13 | 2,357.70 |
| U.S. Equities (S&P 500, US$) | 5.26 | 11.25 | 29.74 | 7,580.06 |
| Global Equities (MSCI World, US$) | 4.61 | 10.72 | 28.02 | 4,864.59 |
| Emerging Markets (MSCI Emerging Markets, US$) | 9.71 | 25.73 | 55.14 | 1,752.15 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | -1.53 | -0.49 | -0.40 | 0.7250 |
| C$/Euro (€) | -0.96 | 0.21 | -3.09 | 0.6217 |
| C$/Pound (£) | -0.48 | -0.39 | -0.43 | 0.5387 |
| C$/Yen (¥) | 0.10 | 1.04 | 10.01 | 115.450 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | -1.53 | 3.44 | 32.47 | 4,593.00 |
| Oil WTI ($/barrel) | -11.88 | 53.16 | 48.50 | 87.36 |
| Natural Gas ($/MMBtu) | 8.08 | -10.38 | -20.59 | 3.29 |
†Total Return, as at May 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.
Clashes near Hormuz flare even as U.S.–Iran talks progress. Through May, the U.S.-Iran conflict remained unresolved, and the Strait of Hormuz stayed largely closed. Mid- to late-May saw repeated failed proposals, with both sides rejecting terms, including limits on Iran’s nuclear program. President Trump delayed planned strikes while warning action could resume, as Iran signaled potential escalation beyond the region. Regional governments urged continued diplomacy, while officials later reported progress in talks despite renewed clashes near the strait, where both sides exchanged attacks. Oil prices moved lower over the same period.
Did you know?
More than half of Americans have used buy now, pay later financing, according to Gallup research, with about one in four using it regularly. Usage is highest among lower-income households and those experiencing financial strain, with nearly half of financially uncomfortable individuals relying on this form of payment. Gallup also found that usage has increased among consumers concerned about credit card debt, highlighting its role as an alternative payment method and budgeting tool within household financial management decisions.
Insights from our Portfolio Managers
Three years into the AI boom, its impact on both the real economy and financial markets is impossible to ignore. But for investors, the story now extends beyond AI alone…
AI‑linked semiconductor stocks have dramatically outpaced the broader U.S. market, and the industry is on track to approach a trillion dollars in annual sales this year. But the more important investment story is not just about AI leadership, it’s also about what that leadership means for market concentration, diversification, and where opportunities are emerging beyond the market’s narrow winners. A small group of AI leaders now drives a disproportionate share of index returns, pushing market concentration to multi‑decade highs and making selectivity increasingly important. Most of the gains have come from hardware and infrastructure, while many software companies have lagged as investors weigh who will be disrupted and who will adapt. Beyond tech, data‑center builders, equipment suppliers, and power and utility companies have also benefited, reflecting the growing demand for the physical backbone required to support AI and a more digital economy.
“AI has evolved from buzzword to earnings engine, but the opportunity set is broad, uneven, and extends well beyond the most obvious names. We’re finding value across the ecosystem: in select chip and infrastructure leaders, in companies using AI to improve operations and productivity, and in areas of the market supported by the buildout behind this theme. At the same time, we’re very mindful that a handful of names now dominate the indices. That’s why we’re staying diversified, leaning into structural winners, and resisting the temptation to let any single theme define our portfolios.”
— Craig Maddock, VP & Senior Portfolio Manager, Head of Multi-Asset Management
