Note from Caitlin

As we welcome 2026, I want to take a moment to thank you for the trust you place in our team. It is something we never take lightly. A new year often brings reflection, renewed focus, and thoughtful decisions about what matters most. Whatever this season looks like for you, we are grateful to be alongside you as a steady partner in your planning. We look forward to the year ahead and to continuing the conversations, guidance, and support that help bring clarity and confidence to your financial life.

Market Update

Markets have entered the new year, processing a steady flow of headlines, which reinforces the value of staying anchored to fundamentals. Below is a brief overview of key themes shaping the current environment.

Geopolitics

The year has opened with elevated geopolitical activity, including renewed focus on Venezuela, Iran, and Greenland. In Venezuela, the potential for political change and renewed U.S. involvement has raised speculation around increased oil production. While output could rise over time, decades of underinvestment, infrastructure challenges, and political instability suggest any recovery would be gradual and capital intensive.

For Canada, the longer-term consideration is potential competition from Venezuelan crude for U.S. refiners. That said, Canada benefits from deeply embedded pipeline infrastructure into the U.S. and improved export flexibility following the Trans Mountain Pipeline expansion. These factors should help protect Canadian market share. Recent weakness in Canadian energy equities may overstate the near-term risk, given the practical challenges Venezuela faces in materially increasing production.

Elsewhere, ongoing tensions involving Iran and broader geopolitical rhetoric highlight continued uncertainty. While such developments can create short-term volatility, recent history underscores the importance of maintaining perspective and focusing on economic fundamentals rather than reacting to headlines.

Corporate earnings

Corporate fundamentals remain supportive. Forward earnings expectations across major markets continue to rise, and the U.S. Q4 2025 earnings season has begun with expectations for high single digit growth for the S&P 500. Following an estimated 12 percent increase in global earnings in 2025, consensus forecasts point to a further 14 percent gain in 2026. Valuations remain above long-term averages, which can leave markets more sensitive to negative surprises. However, steady earnings growth continues to provide a strong foundation for equities.

Central banks

In Canada, recent labour market data, particularly signs of stabilization in trade-exposed sectors, may allow the Bank of Canada to remain patient. With inflation near target, the Bank has flexibility to monitor incoming data, and both RBC Economics and futures markets expect policy rates to remain unchanged in the near term.

In the U.S., markets are pricing in roughly 50 basis points of rate cuts over the next year. Ongoing uncertainty around tariffs complicates the outlook for the Federal Reserve, though concerns around central bank independence have had limited market impact. Inflation expectations remain stable, suggesting continued investor confidence in institutional safeguards.

Takeaway

While geopolitical developments and policy uncertainty may drive periods of volatility, corporate earnings and underlying economic fundamentals remain the primary drivers of equity markets. These continue to look supportive in the quarters ahead. An invested but watchful approach remains appropriate.

Contribution Season

This is a timely moment to review your TFSA and FHSA contribution room. While many people are familiar with these accounts, uncertainty often remains around available space and which account to prioritize. A quick review can help ensure contributions align with your overall plan.

This season is also a natural opportunity to involve loved ones. Opening an account for a child or young adult, making a contribution as a gift, or having a simple conversation about how these accounts work can help build strong financial habits early.

If you would like support confirming your contribution room, deciding where to contribute, or setting up an account for a family member, our team is happy to help.

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that

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