January 2026 Market Commentary

Markets entered 2026 on constructive footing, and January largely reinforced a theme we expect to persist, resilience in the face of elevated headlines. Equity markets delivered modest gains across Canada and the United States, with the S&P 500 closing the month at 6,939 and the S&P/TSX Composite ending January at 31,924. Those gains were supported by improving inflation dynamics, steady central bank policy, and continued broadening beneath the surface. Importantly, they were achieved despite several moments that introduced volatility, which markets largely worked through without lasting damage.

In the United States, the Federal Reserve held rates steady and reiterated a data dependent stance, reinforcing stability rather than signaling a renewed easing cycle. A late month uptick in producer prices briefly shifted rate expectations and added noise but did little to alter the broader picture. The market response suggested investors remain comfortable navigating a pause, one that allows fundamentals and earnings to reassert themselves after several years of policy driven momentum.

Corporate results reinforced that shift. Dispersion widened meaningfully, particularly within mega cap technology, where companies demonstrating clear monetization and earnings durability were rewarded, while others faced increased scrutiny around capital intensity and margins. This dynamic underscores a market that is becoming more selective, less driven by broad narratives and more focused on execution, cash flow, and fundamentals.

The most pronounced volatility of the month followed President Trump’s announcement of Kevin Warsh as his pick to succeed Jerome Powell as Federal Reserve Chair. While the nomination was broadly accepted, markets initially interpreted the move as more hawkish, triggering a rapid unwind of crowded positioning, particularly in precious metals. Gold and silver experienced sharp drawdowns as the U.S. dollar strengthened and investors recalibrated expectations around the debasement trade. Even sharp, headline driven drawdowns tended to reflect positioning and price discovery rather than a deterioration in underlying market function, a distinction that continues to matter for long term investors.

Beyond monetary policy, January delivered no shortage of geopolitical developments. Discussions at the World Economic Forum in Davos highlighted a world grappling with fragmentation, policy uncertainty, and shifting alliances, while events in Venezuela introduced fresh headlines around energy security and political risk. In both cases, market reactions remained measured, reinforcing the view that investors continue to distinguish between geopolitical noise and developments with durable economic impact.

Taken together, January offered a useful reminder that markets do not require a calm world to function, they require a functioning one. Despite policy uncertainty, geopolitical tension, and episodic volatility, capital continued to flow toward areas of quality, earnings visibility, and long-term opportunity. Our approach remains unchanged, stay invested, stay selective, and use volatility constructively rather than reactively.

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