Global markets enter the second half of the year in a better position than many investors would have expected just a few months ago. While geopolitical risks remain very real, strong corporate earnings and a resilient global economy have helped support financial markets as they continue to navigate periods of uncertainty.

The agreement between the United States and Iran has largely held together, although occasional flare ups continue to remind investors that tensions are not fully behind us. Encouragingly, shipping through the Strait of Hormuz has continued to recover, reducing one of the biggest risks facing the global economy earlier this year. Oil prices have meaningfully pulled back, bond yields have eased from their highs, and equity markets remain reasonably stable.

One of the biggest takeaways from the past several months is that markets can often see past the short-term noise. Geopolitical events on their own will often create volatility, but they don’t always leave a lasting impact on markets unless they lead to a meaningful slowdown in economic growth or corporate earnings. The global economy is influenced by many different forces and businesses have become increasingly effective at managing supply chain disruptions and changing conditions. The world also uses energy far more efficiently than it did decades ago, helping reduce the economic impact of disruptions that would once have been much more severe.

For us, this reinforces the importance of maintaining a disciplined investment process. Rather than reacting to every headline, we continue to evaluate opportunities from multiple perspectives while remaining focused on protecting capital and participating in long term market growth.

Despite an uncomfortable stream of headlines, the first half of 2026 turned out to be a strong period for client portfolios. Global equities saw fantastic growth, supported by continued investment in artificial intelligence and steadily improving earnings expectations. Canadian markets also saw reasonable growth with Financials, Energy and Industrials leading much of the advance. International developed markets also produced solid gains while emerging markets were the strongest performers, driven largely by continued strength across Asia and ongoing investment in AI infrastructure.

The fixed income markets also presented opportunistic entry points as uncertainty around inflation kept bond yields elevated for much of the period.

Looking ahead the economic backdrop appears reasonably healthy. If shipping through the Strait of Hormuz continues to normalize, lower energy and transportation costs should provide additional support for consumers as they navigate inflation pressures. Those benefits could be especially meaningful in Europe and parts of Asia where imported energy plays a larger role in the overall economy.

In the United States, ongoing investment in artificial intelligence continues to be the biggest drivers of economic growth. While there will undoubtedly be debate about whether companies can ultimately generate sufficient returns on these enormous investments, we believe the future of AI will always remain a critical force in both the economy and financial markets. 

Canada's outlook appears to be reasonable, although uncertainty surrounding trade policy continues to weigh on business confidence. The move toward annual CUSMA reviews instead of a straightforward long-term extension leaves the agreement intact but also leaves businesses with less certainty when making investment and hiring decisions.

These past six months have clearly shown that markets can find resiliency in the face of negative headlines.  That said, the recent market performance has also pushed valuations even higher, leaving much less room for disappointment.

As always, we remain focused on protecting capital while identifying attractive long-term opportunities. We continue to believe that maintaining a diversified portfolio and a disciplined investment process remains the most effective way to navigate an environment that will almost certainly continue to produce new levels of uncertainty.

As always, please feel free to reach out if you have any questions or want to connect.