Last week, global investors were relatively optimistic on hopes the US and Iran were working towards a peace deal. However, the two sides remain in negotiations, leaving the Strait of Hormuz effectively closed, which is helping to keep oil prices high. Higher oil prices are pushing up inflation around the world and raising concerns that consumer spending will be impacted. Last week in Canada, data showed that the annual inflation rate increased in April. And while retail sales increased, it was mostly due to higher gasoline prices. Economic uncertainty persists, leaving markets to carefully analyze each and every scheduled economic announcement.

• Canada’s gross domestic product growth in the first quarter of 2026 will be announced on Friday. In the final quarter of 2025, the economy shrank by 0.6%, annualized.
• Trade tensions continue to weigh on some sectors of Canada’s economy. Heading into the second quarter, higher gasoline prices appear to be weighing on household spending.
• A key measure of US inflationary pressures will be released this week. The personal consumption expenditure price index (PCE) will be announced on Thursday. The PCE rose by 3.5% year over year in March.
• In Canada, the Big 5 banks will release earnings this week, including CIBC on Thursday. Key earnings in the US include Salesforce, Best Buy and Costco.
• Looking abroad, China’s industrial profits will be released on Tuesday, European consumer confidence on Thursday and India’s and Brazil’s economic growth rate on Friday.

The performance of Canada’s economy during the first quarter of 2026 will be a closely watched announcement. The conflict in the Middle East likely had little impact on Canada’s economy in the first quarter but has showed signs of impacting economic conditions in the second quarter. Canada’s economy is not immune from geopolitical tensions but has shown its resiliency over the long term.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.