Market Outlook - February 2026

Looking ahead, the macro backdrop remains more supportive than market headlines might suggest. One of the most underappreciated dynamics today is the scale of global policy stimulus now in motion. With roughly 90 percent of global GDP tied to economies actively easing monetary conditions, and meaningful fiscal stimulus layered on top, the world is experiencing a policy impulse more commonly associated with post‑recession environments. The difference this time is that the U.S. economy avoided a formal recession, allowing stimulus to act as an accelerant rather than a repair mechanism. Historically, this combination has been constructive for earnings, cyclical assets, and real‑economy exposure.

Within that framework, Canada stands out. The TSX remains one of the most cyclical major equity markets globally, with meaningful exposure to Energy, Materials, Financials, and industrial activity. In contrast, the S&P 500 has increasingly become a growth‑oriented benchmark, dominated by a narrow set of mega‑cap technology companies that now behave more defensively due to their maturity and valuation sensitivity. As global growth broadens and stimulus works its way through the system, leadership has begun to rotate toward cyclicality, a dynamic that historically favours Canadian equities. While the U.S. remains structurally strong, the current phase of the cycle appears better aligned with markets that benefit from economic momentum rather than scarcity‑driven growth.

Geopolitical risks remain present, but their market impact should be viewed in context. Trade tensions, elections, and policy negotiations tend to introduce volatility, not necessarily lasting damage, particularly when economic data and corporate earnings are improving. Market history suggests that true crises typically emerge during economic slowdowns, not during recoveries supported by stimulus. In an environment where earnings growth is stabilizing and policy remains accommodative; investors tend to look through longer‑term uncertainties and focus on near‑term fundamentals.

Finally, real assets and precious metals continue to play an important role. While parts of the sector have become more crowded following a strong run, the underlying case remains intact. Global stimulus, currency dynamics, and efforts to rebalance economic growth toward manufacturing and exports support both the cyclical and structural case for maintaining exposure. For portfolios, this reinforces the importance of balance: maintaining participation in growth where valuations are reasonable, preserving downside protection through diversification, and remaining flexible enough to take advantage of opportunities created by volatility.

As 2026 progresses, we remain focused on discipline rather than prediction. Periods of rotation and uncertainty often create attractive entry points into high‑quality businesses with durable fundamentals, and our approach continues to emphasize risk management, valuation awareness, and long‑term resilience.

If you would like to receive a copy of our February 2026 market commentary, please email us at msbwealth@nbpcd.com