GWM Team
GWM Team
April 30, 2026
Monthly Report: May 2026
A few topics our newsletter touches on this month:
- Our Thoughts: Ceasefire & Tech Earnings
- By the numbers: April
- Other Things: Disruptors podcast, Global Insight Monthly, Arts in Ottawa corner
Monthly snapshot: Mark, Sarah and Peter (who missed the photo op) attended the April 22nd Tech on Tap event in the Kanata Tech park hosted by RBCx.
Our Thoughts: Ceasefire & Tech Earnings
Despite limited clarity around a resolution to the Middle East conflict, markets have remained relatively constructive. We provide some context around the factors supporting investor sentiment, along with recent developments from central banks
A Delicate Balance
The U.S.-Iran ceasefire remains broadly intact, even as progress has been uneven. With diplomatic channels still active behind the scenes, a negotiated resolution that reopens the Strait of Hormuz remains a reasonable base case scenario, but markets appear to have already priced in much of this outcome.
Equity markets have pushed to new highs, supported by an economy that has demonstrated resilience despite elevated commodity prices. This strength reflects several reinforcing factors: strong corporate earnings, ongoing AI-driven business investment, consumers absorbing higher energy costs better than anticipated, and an economy that is structurally less oil-intensive than in prior decades.
Nevertheless, the current environment is best characterized as “tenuously stable”, with timing the key variable. The longer the Strait remains closed, the more strain builds beneath the surface. Temporary buffers—inventory drawdowns, strategic reserve releases, and logistical workarounds—have helped cushion the immediate oil supply disruption. As these buffers diminish, the supply-demand imbalances could become more acute, increasing the risk that elevated energy prices begin to weigh more meaningfully on economic activity.
AI Spending Meets Earnings Test
The latest round of Big Tech earnings was closely watched, given the group’s outsized influence on market performance and elevated profit growth expectations. Overall, results were constructive, with most companies continuing to deliver solid revenue expansion, healthy margins, and strong cash flows. Investor reactions, however, remained selective, with markets rewarding companies showing that heavy AI-related spending is translating into tangible earnings rather than simply higher capital intensity.
Upward earnings revisions have also helped improve the group’s valuation relative to expected growth, though we expect some degree of scrutiny to persist as AI-related spending, already sizeable, continues to scale higher. Reassuringly, earnings releases from semiconductor companies so far have reinforced confidence that AI infrastructure demand remains robust. We continue to view AI as a compelling long-term growth theme, while recognizing that concentrated market leadership and elevated expectations reinforce the importance of disciplined portfolio diversification.
Central Banks Hold Steady
Recent central bank decisions were largely in line with expectations, with both the Bank of Canada (BoC) and the Federal Reserve (Fed) holding policy rates steady. Long-term inflation expectations remain well anchored, giving policymakers flexibility to remain patient as they assess how the Middle East conflict may affect prices, consumer spending, and business sentiment. Since the onset of the U.S.-Iran war, markets have pared back expectations for lower interest rates, with investors now anticipating both the Fed and BoC to remain on hold through the next several meetings. The latest Fed meeting also marked Jerome Powell’s final meeting at the helm. Powell indicated he plans to remain on the rate-setting committee as a governor for a period "to be determined," delaying the need for the Trump administration to nominate another board member. As Kevin Warsh's nomination to succeed him as chair continues to advance through the Senate confirmation process, attention could shift towards the leadership transition at the central bank. While the Fed's monetary policy framework tends to evolve gradually, shifts in communication styles and policy "reaction functions" to macro developments can occasionally introduce short-term market volatility as investors adjust to a new leadership regime. Geopolitical headlines will likely remain noisy with the U.S. and Iran conflict locked in a negotiating phase. Recent strength in equities has been fundamentally supported by sturdy profit growth, but we are mindful that markets have largely embraced the narrative of a timely resolution. This leaves the outlook more sensitive to delays, as the cumulative effects of high commodity prices could become more pronounced over time. Keeping a long-term perspective, combined with an awareness of evolving risks, remains a useful approach for navigating the near-term uncertainty.
Takeaway
Geopolitical headlines will likely remain noisy with the U.S. and Iran conflict locked in a negotiating phase. Recent strength in equities has been fundamentally supported by sturdy profit growth, but we are mindful that markets have largely embraced the narrative of a timely resolution. This leaves the outlook more sensitive to delays, as the cumulative effects of high commodity prices could become more pronounced over time. Keeping a long-term perspective, combined with an awareness of evolving risks, remains a useful approach for navigating the near-term uncertainty.
By the numbers (April): The TSX was up 3.81% while the S&P 500 was up 10.49% in U.S. dollars (up 7.89% in $CAD). The tech-heavy NASDAQ was up 15.31% in $USD (up 12.60% in $CAD) The Europe, Australia & Far East index (EAFE) was up 4.90 while the Emerging Markets index was up 11.90%. The Canadian bond market was up 0.12%
Interesting Listening/Reading:
- Disruptors - A dynamic <30 min RBC podcast hosted by John Stackhouse about reimagining Canada’s economy in a time of unprecedented change.
- To check out our Global Insight Monthly for April find the link here.
“Arts in Ottawa” Corner: Canadian Tulip Festival
74 years of tradition in Canada’s capital. Take adventure of all the cool events going on in May, focused mostly at Commissioners Park at Dow’s Lake. Lots of interest events, art exhibits and performances throughout the month.
Regards,
Mark, Peter, Sarah, Corinne & Nathalie
Gallivan Wealth Management of RBC Dominion Securities
Mark Gallivan, CPA, CA, CFP
Senior Portfolio Manager & Wealth Advisor
mark.gallivan@rbc.com
Phone: 613-721-6033
Peter Gallivan, CFP, CIM
Associate Wealth Advisor & Financial Planner
peter.gallivan@rbc.com
Phone: 613-725-3319
Sarah Bertrand, CPA, CA, CIM, CFP
Associate Portfolio Manager
sarah.bertrand@rbc.com
Phone: 613-733-7323
Corinne Farndale
Senior Associate
corinne.farndale@rbc.com
Phone: 613-721-8928
Nathalie Da Costa
Associate
nathalie.dacosta@rbc.com
Phone: 613-721-7441
RBC Dominion Securities Inc.