August in review
North American markets moved higher in August, supported by strong corporate earnings and renewed confidence in artificial intelligence (A.I.) spending, even as investors navigated a more challenging macroeconomic backdrop. Canada-U.S. trade tensions intensified after negotiations broke down and new U.S. tariffs took effect August 22nd, raising investor concerns about the outlook for economic growth, inflation and business investment in Canada. Meanwhile, continued tensions between the U.S. and Iran kept the Strait of Hormuz and global energy supplies in focus, contributing to volatility in oil markets. Strong earnings from major technology companies helped ease concerns that A.I. investment was losing momentum. Ultimately, August demonstrated the resilience of equity markets despite persistent trade uncertainty, geopolitical risks and shifting expectations around the durability of A.I.-driven growth.
Here are some of August's most notable events:
Canada-U.S. trade tensions escalate as negotiations break down. Trade negotiations between Canada and the U.S. dominated headlines in late August. Hopes for a negotiated agreement briefly improved after the U.S. delayed the implementation of planned 50% tariffs on approximately C$28 billion of Canadian exports to allow additional time for discussions. However, negotiations ultimately broke down, and the U.S. tariffs took effect on August 22. In response, Canada announced “dollar-for-dollar, rate-for-rate” retaliatory tariffs on approximately C$28 billion of U.S. imports, targeting sectors such as steel, dairy, appliances, and electronics. The federal government also introduced a C$7.5 billion support package aimed at helping Canadian workers and businesses most affected by the tariffs.
U.S.-Iran tensions keep energy markets in focus. Hopes for progress between the U.S. and Iran repeatedly surfaced during August as negotiations continued over reopening the Strait of Hormuz. However, talks failed to produce a lasting agreement and tensions intensified later in the month. The U.S. expanded economic sanctions against Iran and its trading partners, while Iran continued to threaten energy flows through the region. By month-end, the two countries had exchanged further military attacks, contributing to volatile oil prices and keeping global energy supply and inflation risks elevated.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill | 0.19 | 1.49 | 2.37 | 193.73 |
| Canadian Bonds | -0.21 | 0.44 | 2.01 | 1,205.12 |
| Canadian Equities | 3.10 | 16.04 | 29.96 | 36,270.48 |
| U.S. Bonds | 0.39 | -0.31 | 1.89 | 2,341.67 |
| U.S. Equities | 2.72 | 13.12 | 20.35 | 7,686.14 |
| Global Equities | 2.60 | 13.42 | 20.87 | 4,967.92 |
| Emerging Markets | 3.39 | 24.33 | 39.64 | 1,719.31 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | 1.21 | -0.93 | -0.81 | 0.7218 |
| C$/Euro (€) | 0.40 | 0.15 | -0.21 | 0.6213 |
| C$/Pound (£) | 0.66 | -1.50 | -1.13 | 0.5327 |
| C$/Yen (¥) | 2.69 | 0.92 | 7.71 | 115.313 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | 32.39 | 19.10 | 63.66 | 407.64 |
| Oil WTI ($/barrel) | 5.24 | 50.59 | 38.32 | 85.76 |
| Natural Gas ($/MMBtu) | 5.31 | -21.96 | -25.81 | 2.94 |
Source: Bloomberg. Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). Indices are not managed, and it is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
† Total Return, as at August 31, 2026.
Strong earnings and A.I. demand support U.S. equities. Strong corporate earnings supported U.S. equities in August, with a large majority of S&P 500 companies reporting second-quarter results above analysts’ expectations. Technology remained an important driver as continued investment in artificial intelligence helped offset concerns surrounding trade tensions, higher bond yields and geopolitical uncertainty. Late in the month, NVIDIA forecast sales growth of roughly 70% for its next fiscal year, well above expectations, helping ease concerns that A.I. investment was losing momentum. Investor enthusiasm toward the sector helped drive a 12.9% gain in Canada’s Information Technology sector during the month, reinforcing the growing importance of A.I. to both market performance and economic growth.
Did you know?
Canada recorded an $8.8 billion current account surplus in the second quarter of 2026, its first since 2022 and largest since 2005. A current account surplus occurs when a country's earnings from exports, services, and investment income exceed its spending on imports and payments to other countries, meaning more money is flowing into the country than out. Stronger energy and automotive exports helped drive a $12.2 billion goods trade surplus, while the Materials sector surged 25.8% in August amid investor demand for commodity-related businesses. Foreign investors added a record $110.2 billion in Canadian debt securities, including $80.8 billion in government bonds, while trimming Canadian equity holdings by $9.6 billion, a second consecutive quarter of divestment. The contrasting flows highlight continued confidence in Canada's economy, alongside a more selective approach to equity investing.
Insights from our Portfolio Managers
Despite heightened trade war headlines, the market impact has remained relatively limited in August. Recent developments have, however, contributed to increased economic and market uncertainty, prompting investors to closely assess the potential implications for global growth, inflation, and international trade.
The trade war is a meaningful economic development, but it has not become a broad market or portfolio-level risk event. Its impact has remained concentrated in a relatively narrow group of sectors, while equity and fixed income markets have continued to demonstrate resilience. We are monitoring developments closely and reassessing our positioning regularly. Our portfolios provide us with multiple levers to respond, allowing us to move quickly and make targeted adjustments if market conditions or the economic outlook materially change.
— Craig Maddock, VP & Senior Portfolio Manager, Head of Multi-Asset Management
