June 2026 Market Commentary

June felt a bit like a summer road trip, complete with a few unexpected detours, some geopolitical speed bumps, and ultimately a successful arrival at the destination. Despite elevated tensions in the Middle East, concerns over energy supply disruptions, and ongoing uncertainty surrounding global trade and interest rates, equity markets displayed remarkable resilience. By month-end, the S&P/TSX Composite Index had climbed to a new record close of 34,856.99, up 0.25% from May, while the S&P 500 finished at 7,499.36, down 1.32% from its May close. While the U.S. benchmark gave back a small portion of its gains during June, it nevertheless completed its strongest quarter since 2020, supported by continued corporate earnings strength, solid economic data, and ongoing enthusiasm surrounding artificial intelligence and technology-related investments. Investors spent much of June focused on the potential impact of the U.S.-Iran conflict and the risk of disruptions through the Strait of Hormuz, but as tensions eased and a ceasefire emerged late in the month, markets responded with renewed optimism and a strong finish to the second quarter.

Once again geopolitical headlines dominated the news cycle, and corporate developments continued to support investor confidence. Technology and artificial intelligence remained central themes, with investors eagerly following high-profile growth stories and IPO activity, including excitement surrounding SpaceX and the broader space economy. In the U.S., semiconductor and AI-related companies helped fuel a late-month rebound, while Canada's market benefited from strength in financials, industrials, and select resource companies. It is another reminder that markets often spend less time looking in the rear-view mirror and more time pricing the opportunities that lie ahead.

Bond investors did not enjoy the luxury of a quiet June. The U.S. 10-year Treasury yield spent much of the month bouncing between shifting inflation expectations, geopolitical concerns, and evolving central bank rhetoric. As oil prices surged and then retreated following the U.S.-Iran ceasefire, rate expectations followed suit. By month-end, however, markets appeared increasingly comfortable with the notion that both the Federal Reserve and Bank of Canada are likely to remain on hold for the foreseeable future. While hopes for aggressive rate cuts have faded, so too have concerns about an imminent economic slowdown. In many respects, the bond market's message was one of cautious optimism: growth may be moderating, but it remains resilient enough to support a stable backdrop for both fixed income and equity investors.

Adding to the optimistic backdrop was the economic boost associated with the FIFA World Cup being hosted across North America. Increased tourism, infrastructure spending, hospitality activity, and consumer spending provided a welcome tailwind for many sectors. Combined with resilient labour markets, stabilizing inflation, and healthy corporate earnings, the economic picture remains constructive. Despite a steady stream of geopolitical and economic challenges, both the TSX and S&P 500 continued to demonstrate remarkable resilience in June. If the first half of 2026 has taught investors anything, it is that markets remain remarkably adept at climbing walls of worry, even when the headlines suggest they should be doing the opposite.

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