February in review
Amid a busy month of economic and geopolitical developments and heightened volatility, most global equity markets advanced in February, with the U.S. the notable exception. Canadian equities led major markets, as the S&P/TSX Composite Index rose 7.7%, with 10 of 11 sectors advancing. Materials (+21.7%), Consumer Discretionary (+10.5%) and Consumer Staples (+10.0%) led gains, while Information Technology (-6.2%) was the only sector to decline. In contrast, U.S. equities lagged, with the S&P 500 down 0.8% for the month. Fixed income markets also delivered positive returns, as Canadian bonds gained 1.7% and U.S. bonds rose 1.6%. Commodity performance was mixed as gold advanced 10.6% and oil rose 3.5%, while natural gas declined 29.0%. Emerging markets outperformed developed peers, with the MSCI Emerging Markets Index increasing 5.5% for the month.
Here are some of February's most notable events:
Middle East tensions escalate, sending oil prices higher. On February 28, the United States and Israel launched coordinated military strikes against Iran after weeks of rising tensions. U.S. officials said the goal was to prevent Iran from developing a nuclear weapon and reduce security threats. The strikes targeted military and nuclear-related sites, and Iran responded with missile attacks on Israeli and U.S. positions in the region. The escalation increased the risk of a broader regional conflict and added uncertainty to global energy markets. Oil prices moved higher in early trading on concerns about possible supply disruptions, though the lasting impact will depend on how the situation develops.
Canada’s economy contracts in the fourth quarter of 2025. Canada’s real GDP declined 0.2% in the fourth quarter of 2025, reversing a 0.6% gain in the prior quarter and making Canada the only G7 country to record negative growth this period. The pullback was driven largely by businesses reducing inventories, particularly in manufacturing and wholesale trade. Exports rose 1.5% in the quarter, led by gold and aluminum, while imports edged higher. For the full year, exports declined due to weaker U.S. demand, and imports fell as a sharp third-quarter drop outweighed gains later in the year. Household spending and government investment provided partial offsets.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill (FTSE Canada 60 Day T-Bill) | 0.17 | 0.35 | 2.61 | 191.55 |
| Canadian Bonds (FTSE Canada Universe Bond) | 1.66 | 2.25 | 3.04 | 1,226.75 |
| Canadian Equities (S&P/TSX Composite) | 7.72 | 8.63 | 40.35 | 34,339.99 |
| U.S. Bonds (Bloomberg U.S. Aggregate Bond, US$) | 1.64 | 1.75 | 6.68 | 2,389.86 |
| U.S. Equities (S&P 500, US$) | -0.76 | 0.67 | 18.83 | 6,878.88 |
| Global Equities (MSCI World, US$) | 0.76 | 3.04 | 23.11 | 4,556.79 |
| Emerging Markets (MSCI Emerging Markets, US$) | 5.50 | 14.85 | 47.19 | 1,610.70 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | -0.20 | 0.62 | 5.85 | 0.7331 |
| C$/Euro (€) | 0.13 | 0.03 | -6.84 | 0.6206 |
| C$/Pound (£) | 1.32 | 0.54 | -1.09 | 0.5437 |
| C$/Yen (¥) | 0.61 | 0.13 | 10.24 | 114.402 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | 10.60 | 19.98 | 72.41 | 5,247.90 |
| Oil WTI ($/barrel) | 3.52 | 17.43 | 2.09 | 67.02 |
| Natural Gas ($/MMBtu) | -29.00 | -9.32 | -21.65 | 2.86 |
†Total Return, as at February 28 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.
Artificial intelligence (AI) thought exercise sends ripples through equity markets. A report from Citrini Research sparked a sell-off in several widely held stocks after outlining a hypothetical scenario in which AI could displace a significant number of jobs. Although framed as a thought exercise rather than a forecast, the report raised concerns about longer-term economic risks linked to rapid AI adoption. Shares of technology, payments, and software companies experienced heightened volatility as investors reassessed future earnings potential and growth assumptions, amid uncertainty about how AI may reshape business models.
Did you know?
The U.S. Supreme Court recently ruled that President Trump’s use of emergency powers under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on imported goods was unlawful. The Court said the law does not give the president the authority to set tariffs on his own and that Congress must approve such trade measures. Following the decision, some companies have sought refunds for duties they previously paid. At the same time, the ruling has renewed debate about U.S. trade policy and the balance of power between Congress and the executive branch, with some firms even selling their potential refund claims to investors.
Insights from our Portfolio Managers
AI remained the market’s dominant theme in February, but the way investors are participating has shifted. After a volatile start to the year for some of the biggest tech and software names, attention has moved toward the “picks and shovels” of the AI build out – the chipmakers, memory producers, and equipment suppliers powering the infrastructure behind the technology. These businesses are seeing strong demand as AI and data centre spending stay elevated, with tighter supply helping support pricing and earnings expectations. At the same time, market leadership has shifted away from being driven almost entirely by a small group of mega cap tech stocks.
Investors are still willing to pay for real, AI driven growth, as we can see in the prices of the largest tech stocks, but they’re drawing clearer lines between companies that are simply spending heavily on AI and those that are getting paid for it. Hardware and infrastructure names have been rewarded, while parts of the software space have come under pressure as markets reassess business models and how quickly AI will translate into profits – only increasing the importance of being selective.
Markets are starting to distinguish between the builders, the buyers, and the beneficiaries of AI. We want exposure to the structural winners in AI infrastructure and adoption, without turning portfolios into a narrow bet on any single theme. That’s where diversification and active management work together – leaning into durable AI trends while managing the risks that come with crowded trades and fast moving narratives.
— Craig Maddock, VP & Senior Portfolio Manager, Head of Multi-Asset Management
