Join Paul Holba, President and CIO, Empire Life Investments Inc., as he analyzes shifting global markets in the second half of 2026, offering insights on inflation shocks, trade tensions, and active portfolio management.
As we enter the second half of 2026, the global market is being reshaped by a resurgence of inflation triggered by the war in Iran. This geopolitical conflict has introduced a new era of volatility, forcing a re-evaluation of all major asset classes.
Canadian equities: The resource hedge
In Canada, we see a story of dual resilience. While high energy prices have become a growth engine for the S&P/TSX Index, gold prices continue to fluctuate as investors price out 2026 rate cuts.1 The Canadian banking sector remains stable at present due to solid fundamentals, though this is tempered by elevated valuations and uncertainty surrounding the July CUSMA negotiations.
We are closely weighing potential 10% blanket tariffs and U.S. trade demands against Canada’s strategic energy position.
U.S. Equities: Innovation amidst inflation
In the U.S., the economy is balancing resilient growth against inflation, which reached 3.8% in April.2 This “affordability crisis” is a central theme for the upcoming November 3rd midterms, yet equity markets are finding support in massive structural shifts.
We’re witnessing a dual-sector evolution: an ‘Energy Renaissance,’ with natural gas exports projected to grow 18% this year, and a maturing ‘Space Economy.’3 Additionally, hyperscaler spending by tech giants is expected to hit $800 billion by year-end, serving as a further tailwind for U.S. equities.3
Global Equities: Divergent recovery
Globally, the environment remains fragmented. Europe has faced downward GDP revisions as high energy costs dampen consumption, while Japan is buffering similar inflationary headwinds through record spending on digitalization and R&D. Despite a five-year real estate slump, China has maintained a 5% growth rate by pivoting toward high-value sectors like electric vehicles and AI.4
Fixed Income: Policy pauses and a shifting credit frontier
In Fixed Income, the outlook is clouded by persistent price pressures. At the time of this recording, the Bank of Canada held rates steady at 2.25%. With mortgage renewal risks looming, markets are still pricing in potential hikes by year-end. The Federal Reserve maintains a similar “pause and observe” stance. In this environment of tighter capital, a clear divergence is emerging between high-quality and weaker issuers, making disciplined credit selection essential.
As we navigate the complexities of the second half of 2026, the team at Empire Life Investments remains focused on providing the steady stewardship your portfolio requires. Our core strength lies in active management and a deep-seated expertise in fundamental research. This is particularly vital in today’s environment, where we see a widening gap between high-quality companies and those with weaker outlooks.
On behalf of the team at Empire Life Investments, thank you for your continued confidence.
1 Bloomberg, April 27, 2026
2 Bureau of Labor Statistics, “Consumer Price Index Summary”
3 U.S. Energy Information Administration
4 The State Council of the People’s Republic of China
This video includes forward-looking information based on the opinions and views of The Empire Life Insurance Company and Empire Life Investments Inc. as of the date published and is subject to change without notice. The information contained herein is for general informational purposes only, and should not be considered a recommendation to buy or sell any security, nor should it be relied upon as investment, tax, or legal advice. Empire Life and its affiliates assume no responsibility for any reliance on, misuse of, or omission of any information contained in this video; and do not warrant or make any representations regarding the use or the results of the information contained herein in terms of its correctness, accuracy, timeliness, reliability, or otherwise, and do not accept any responsibility for any loss or damage that results from its use. Please seek professional advice before making any investment decisions.
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June 2026