Market Recap* – September, 2026

1. What happened in the markets?

Canada’s economy continued to grow in August, with preliminary GDP estimates pointing to a 0.2% increase. Strength in mining helped offset softer oil and gas production, supporting overall economic activity. Following a stronger-than-expected second quarter, economic growth appears to be easing in Q3, with economists anticipating some slowdown later this year as trade-related headwinds weigh on the outlook.

Prime Minister Mark Carney hosted Canada’s inaugural Investment Summit on September 15, bringing together investors from nearly 30 countries. The event secured approximately $500 billion in new investment commitments directed toward critical infrastructure and strategic industries. The initiative forms part of a broader strategy to attract more than $1 trillion in private investment over the next five years, aimed at enhancing Canada’s long-term economic growth and competitiveness.

Canadian equities experienced a volatile September as escalating U.S.-Canada trade tensions weighed on investor sentiment and increased uncertainty around the economic outlook. The S&P/TSX Composite Index declined 2.6% during the month, reducing its year-to-date gain to 13.0%. Sector performance was broadly negative, with Information Technology standing out as the only sector to post positive returns, rising 3.5%. Communication Services was the weakest-performing sector, falling 9.8%, while all other sectors also finished the month in negative territory.

U.S. equities (S&P 500) edged lower by 0.4% in September, as strength in Information Technology and Communication Services, driven by large-cap companies, was insufficient to offset broader weakness across the market. Despite the monthly decline, the index remained up 12.8% year-to-date, supported by resilient corporate earnings, solid economic fundamentals, and continued expansion in the U.S. economy.

Canadian fixed income markets declined 1.2% in September as domestic bond yields moved higher alongside U.S. Treasury yields, leaving the asset class down 0.8% year-to-date. Rising yields and persistent inflation expectations weighed on bond prices, as investors increasingly priced in the possibility of further interest rate increases and a prolonged period of restrictive monetary policy. Higher borrowing costs are expected to moderate economic activity by reducing consumer spending and business investment.

Money market instruments returned 0.2% in September, bringing year-to-date gains to 1.7%. As the more defensive area of the portfolio, this allocation continued to provide stable income and liquidity, helping to offset volatility across equity and fixed income markets.

The U.S. dollar gained ground against the Canadian dollar during the month as strong U.S. economic data reinforced expectations for additional monetary tightening and supported higher bond yields. In contrast, a softer growth outlook and increased economic uncertainty in Canada put downward pressure on the Canadian dollar.

2. What does it mean for Embark Funds?

Asset class	Change	Impact on cohorts
Canadian Equities	↓	Negative for younger, growth-oriented cohorts. Canadian equities fell as heightened trade frictions between the U.S. and Canada pressured markets.
U.S. Equities	↓	Negative 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. Bonds were down as the yields soared because of higher inflation expectations.
Money Market	↑	Despite market volatility, the short-term government securities delivered steady return.
Canadian Dollar	↓ CAD	Positive for portfolios with foreign exposure. The Canadian dollar weakened because of widening U.S.-Canada yield differentials.