Market Recap* – August, 2026

1. What happened in the markets?

There was no shortage of developments for markets to digest in August.

Canadian real GDP expanded at a robust 3.3% annualized pace in the second quarter of 2026, supported by strong goods exports, a rebound in business investment, and resilient household spending. Canada’s trade relationship with the U.S. deteriorated late in the month following Canada’s decision to suspend trade negotiations. In response, the U.S. imposed 50% tariffs on approximately $20 billion of Canadian goods, effective immediately, while Canada announced retaliatory tariffs set to take effect at the beginning of September. And finally, renewed hostilities between the U.S. and Iran pushed oil prices higher, raising concerns that elevated energy costs could undermine central banks’ efforts to bring inflation under control.

Canadian stocks delivered solid gains in August, with the S&P/TSX Composite Index advancing 3.1%. Sector performance, however, was far from uniform. Materials was the standout performer, surging 25.8% as rising gold prices boosted investor demand for precious metals producers, with the S&P/TSX Global Gold Index climbing 32.2% during the month. At the other end of the spectrum, the Health Care sector lagged, declining 7.0% and finishing as the weakest-performing sector.

August was a volatile month for U.S. equity markets, as investors navigated persistent inflation concerns, growing expectations for additional Federal Reserve rate hikes, and mounting fiscal deficit worries that pushed long-term Treasury yields to multi-year highs. Despite these headwinds, U.S. equities advanced 1.5% over the month, supported by strong corporate earnings. Blockbuster results from several large-cap technology companies helped propel the S&P 500 to new record closing highs.

Canadian fixed income markets posted a modest decline in August, with bonds down 0.2% for the month. Rising inflation expectations and higher government bond yields weighed on performance, as investors reassessed the outlook for interest rates and monetary policy.

Money market instruments delivered a steady return of 0.2%, with short-term government securities providing consistent income and minimal price volatility. This allocation continued to act as a stabilizing force amid market fluctuations and ongoing geopolitical developments.

The Canadian dollar strengthened in August, supported by stronger-than-expected economic data, including robust employment gains and solid GDP growth. The currency also benefited from a moderation in expectations for multiple U.S. Federal Reserve rate hikes, which reduced support for the U.S. dollar.

2. What does it mean for Embark Funds?

Asset class	Change	Impact on cohorts
Canadian Equities	↑	Positive for younger, growth-oriented cohorts. Canadian equities were up on the back of strong Materials performance.
U.S. Equities	↑	Positive for younger, growth-oriented cohorts. Strong earnings from technology companies helped propel the S&P 500 to new record closing highs.
Bonds	↓	Negative for older and more conservative cohorts. The sensitivity of bond markets to changing inflation expectations and central bank policy outlooks negatively impacted the prices.
Money Market	↑	Short-term government securities delivered steady return amid market volatility.
Canadian Dollar	↑ CAD	The stronger Canadian dollar negatively impacted the younger cohorts with more foreign exposure as strong Canadian economic data supported the CAD.