Many of the concerns on the minds of investors went unresolved in the second quarter: there is still conflict in Iran; Canada and the U.S. continue to spar over trade policies; and inflation remains uncomfortably high. None of the above seemed to matter as markets delivered exceptionally strong results, led by the S&P 500 which gained 17.12% for the quarter. International markets also had a double-digit increase, while Canadian stocks rose close to 7%. Even bonds managed a 2% gain with inflation concerns ramping up.
Performance for the quarter highlights (again!) the disconnect that can happen between the stories weighing on investors’ minds (doom and gloom) and how markets will react (euphoria). Ultimately, money invested in Justwealth portfolios is put into stocks and bonds, most of which are directly related to the profitability of corporations. As long as companies in aggregate continue to grow their profits, and pay interest on their debt, the value of investments should go up. Ongoing resiliency of corporations is far more important than most other economic or political problems, which tend to be fleeting and then quickly forgotten.
The U.S. Federal Reserve adopted Kevin Warsh as the new Chairman in May. Warsh takes over from Jerome Powell who was regularly criticized by President Trump. Mr. Warsh has been pretty open in expressing his desire to change many aspects of how the Fed conducts its business, some of which are already implemented, while other items will be reviewed over time via Committees. Consensus estimates have changed considerably from earlier this year, with loosening biases now leaning more towards tightening given the persistence and escalation of inflationary pressures.
In Canada, inflationary pressures aren’t quite as bad as in the U.S., but that’s largely due to our weaker economy. It is important to distinguish, however, that although our economy is a bit softer compared to the U.S., it is still reasonably healthy, with some signs of improving economic data. Unfortunately, given the lack of progress in trade negotiations with the U.S. it is hard to expect a big uptick in economic demand until some kind of cross-border trade resolution occurs.
Canada’s participation in the World Cup as both a host nation and a competitor seems to have gone well! The progress of our athletes was remarkable given our history in the event, and the cities of Toronto and Vancouver received global attention from viewers and attendees. It is very challenging to estimate the direct and indirect economic benefits of such events, but hopefully there is a positive one-time impact and a boost to future tourism and travel to Canada.
Wishing everyone a safe and enjoyable summer!
Here is a recap of market performance as of June 30, 2026*
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