Market Recap* – June, 2026

1. What happened in the markets?

Statistics Canada reported that real GDP grew by 0.5% in April, marking the strongest monthly expansion since mid-2025 and indicating that the Canadian economy had returned to growth following a brief technical recession. While enthusiasm surrounding the global AI theme moderated in June, market leadership broadened across equity markets. European equities outperformed as easing oil prices—following a memorandum of understanding between the U.S. and Iran that led to the reopening of the Strait of Hormuz—helped alleviate stagflation concerns. In the U.S., market participation widened as small-cap and equal-weight equity benchmarks outperformed their large-cap counterparts.

Canadian equities edged higher by 0.5% in June, although performance varied considerably across sectors. Financials led the market, advancing 8.8% on the back of improving economic sentiment and resilient earnings. In contrast, the Materials sector was the weakest performer, declining 12.1% as gold prices retreated sharply, weighing on precious metals producers.

U.S. equity markets experienced heightened volatility in June, pressured early in the month by a sell-off in technology stocks and investor concerns over persistent inflation and a more hawkish Federal Reserve. Although markets rebounded sharply during the final week of trading, the recovery was not sufficient to offset earlier losses, leaving U.S. equities down 1.0% for the month. Mega-cap stocks underperformed as investors rotated away from technology hyperscalers and toward more defensive sectors and small-cap equities, contributing to a broader expansion in market leadership.

Canadian bonds posted positive returns in June, with broad-based bonds gaining 0.5%. Bond prices rose and yields declined after the Bank of Canada held its overnight lending rate unchanged at 2.25% at its June policy meeting. The decision reflected a cautious pause in the easing cycle, as policymakers balanced signs of economic weakness against persistent inflationary pressures.

Money market instruments delivered a steady 0.21% return, with short-term government securities providing consistent income and minimal price volatility. This allocation continued to provide stability and capital preservation amid ongoing market volatility.

The Canadian dollar weakened over the month as investors focused on the growing economic divergence between Canada and the United States. While the commodity-sensitive loonie typically benefits from stronger energy prices, softer crude oil prices throughout June reduced support for the currency. In addition, stronger U.S. economic data prompted markets to reassess the expected path of Federal Reserve policy relative to that of the Bank of Canada, further weighing on the Canadian 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 primarily driven by strong domestic bank earnings.
U.S. Equities	↓	Negative for younger, growth-oriented cohorts. Concerns about high stock market valuations and rising inflation weighed on U.S. equities.
Bonds	↑	Positive for older and more conservative cohorts as Bank of Canada rate pause was beneficial for bonds.
Money Market	↑	Positive for older and more conservative cohorts. Short-term government securities delivered steady return.
Canadian Dollar	↓ CAD	The weaker Canadian dollar provided a lift to younger cohorts with more foreign exposure. The decline in CAD was primarily driven by declining oil prices and stronger US economic data.