{"id":7008677,"date":"2026-08-03T04:15:06","date_gmt":"2026-08-03T04:15:06","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/empire-life-blog-2026-semi-annual-market-outlook-canadian-equities\/"},"modified":"2026-08-03T04:15:06","modified_gmt":"2026-08-03T04:15:06","slug":"empire-life-blog-2026-semi-annual-market-outlook-canadian-equities","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7008677","title":{"rendered":"Empire Life Blog 2026 Semi-Annual Market Outlook: Canadian equities"},"content":{"rendered":"


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Uncertainty continues to hang over the Canadian economy as it slipped into a technical recession in the first quarter. Global market volatility remains high, driven largely by ongoing geopolitical tensions. These conflicts have caused energy prices to spike, which in turn has impacted both consumer behaviour and overall economic growth. Despite these unexpected escalations, we maintain a positive outlook on several key themes identified at the start of the year.\u00a0<\/p>\n

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Outlook\u00a0\u00a0<\/strong><\/span><\/span><\/p>\n

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MID-YEAR HIGHLIGHTS<\/strong><\/span><\/td>\n<\/tr>\n
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  • Spiking global energy prices were a growth engine for Canada\u2019s economy, as energy was the top-performing sector.<\/li>\n
  • The upcoming CUSMA review continues to create uncertainty for the Canadian economy.<\/li>\n
  • We anticipate short-term volatility for gold, but the underlying factors supporting its price remain firmly in place.\u00a0<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

    Energy: A Vital Economic Hedge\u00a0<\/span>\u00a0<\/span><\/p>\n

    While rising fuel and business costs were undeniable, Canada\u2019s economy found a powerful silver lining in the energy surge. Because the energy sector is a cornerstone of the S&P\/TSX Index, those higher prices acted as a vital economic hedge, effectively transforming market volatility into a growth engine. In fact, energy has outperformed every other sector in the market, as illustrated below.1\u00a0<\/sup><\/p>\n

    \"Line<\/span><\/p>\n

    Source: Morningstar as of May 31, 2026\u00a0<\/p>\n

    As we discussed in our published piece \u201cCanada\u2019s Strategic Energy Advantage\u201d earlier this year, this trend has drawn further attention to Canada\u2019s role as a reliable energy supplier, especially given the nation-building projects currently underway. We expect these discussions to remain relevant even after the crisis in the Middle East cools down.\u00a0<\/p>\n

    Trade Uncertainty and CUSMA Negotiations<\/span><\/span><\/p>\n

    Trade dynamics are a significant focus as CUSMA negotiations \"Multipleare slated for a formal review in July of this year. Heading into these talks, U.S. tariffs remain on Canadian steel, aluminum, automobiles and softwood lumber. While trade discussions have begun between Canada and the U.S., separate negotiations between the U.S. and Mexico have raised fears that independent deals could be struck. This scenario could potentially expose all Canadian exports to a 10% blanket tariff. Key U.S. demands include increased U.S. and regional content requirements for automobiles, greater access to the Canadian dairy market and an end to rules requiring U.S. streaming platforms to fund and broadcast domestic Canadian content. We expect CUSMA to be a large focus for investors in the coming months, and we will be paying close attention to how this plays out.\u00a0<\/p>\n

    Resilience in the Banking Sector\u00a0<\/span><\/span><\/p>\n

    \"FinancialWe maintain a positive view of Canada\u2019s banking sector, which has demonstrated resilience during the volatility of the first half of the year. This stability is largely attributed to solid fundamentals within the sector. However, the looming CUSMA review introduces structural headwinds for the banking sector, as potential cross-border credit strains could ripple into domestic loan portfolios and the labour market. Despite our favourable view of this sector in the short term, valuations of Canadian banks remain elevated.\u00a0<\/p>\n

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    Gold: Navigating Inflationary Pressures\u00a0<\/span><\/p>\n

    Gold Gold started the year strong, peaking at US$5417.21\/oz in January.2<\/sup> \"GoldHowever, it dropped significantly in March3<\/sup>\u00a0as higher inflation expectations prompted by the Iran\/U.S. conflict led markets to scale back expectations for rate cuts this year. Prior to this escalation, investors had expected multiple rate cuts in 2026; however, the surge in oil prices has led to fears of higher inflation and more restrictive monetary policy. We expect continued volatility in gold prices in the short-term due to the uncertain outcome of the U.S.\/Iran conflict. Historically supportive factors, such as increased demand from central banks and ongoing geopolitical uncertainty, should continue to be supportive of gold prices.<\/span><\/p>\n

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    \"download-blue\" Download the full Empire Life 2026 Semi-Annual Market Outlook (PDF).\u00a0<\/span><\/span><\/a><\/p>\n\n

    1 <\/sup>Bloomberg, April 27, 2026\u00a0<\/span><\/span><\/p>\n

    2 <\/sup>Bloomberg, January 28 2026\u00a0\u00a0<\/span><\/span><\/p>\n

    <\/span>3 <\/sup>Bloomberg, April 27, 2026\u00a0<\/span><\/span><\/p>\n

    This document reflects the views of Empire Life as of the date published. The information in this document is for general information purposes only and is not to be construed as providing legal, tax, financial or professional advice. The Empire Life Insurance Company assumes no responsibility for any reliance on or misuse or omissions of the information contained in this document. Please seek professional advice before making any decisions.<\/span><\/span><\/p>\n

    Policies are issued by The Empire Life Insurance Company. A description of the key features of the individual variable\u00a0 insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a Segregated Fund is invested at the risk of the contract owner and may increase or decrease in value<\/span>. Past performance is no guarantee of future performance.<\/span><\/p>\n

    Information contained in this report has been obtained from third party sources believed to be reliable, but accuracy cannot be guaranteed. Empire Life Investments Inc. is the Portfolio Manager of certain Empire Life segregated funds. Empire Life Investments Inc. is a wholly-owned subsidiary of The Empire Life Insurance Company.<\/span><\/p>\n

    June 2026<\/p>\n<\/div>\n