May 2026 Market Update

April proved to be a positive month for global markets, with Canadian equities trailing the momentum seen in the United States. The S&P/TSX Composite Index advanced by approximately 3.65%, while U.S. markets outperformed, led primarily by technology and growth sectors. 

Key Influences in April

• The Bank of Canada kept its key interest rate unchanged at 2.25%, signalling a cautious approach and opting to observe economic developments before making any further adjustments. 

• Inflation rose to 2.4% year-over-year, mainly attributed to an increase in gasoline prices resulting from supply disruptions in the Middle East. 

• Oil prices continued their upward trend, which supported Canadian energy firms but also placed additional strain on consumers. 

• The Canadian dollar appreciated against the U.S. dollar, which helped to alleviate some imported inflationary effects. 

• Economic growth stayed slow but positive, while unemployment rates remained elevated, particularly within Ontario. 

Canadian Market Drivers

Canadian markets benefited from higher oil prices, stable interest rates, and a boost in investor sentiment. However, economic growth remained moderate and inflationary pressures resurfaced during the month. 

Looking Ahead

As we move into the summer months, markets are closely monitoring several important factors: 

• Upcoming inflation data to determine whether price increases expand beyond the energy sector. 

• The Bank of Canada’s interest rate decision is scheduled for 2026-06-10. 

• Revised GDP figures to assess whether Canada is experiencing a mere slowdown or losing broader economic momentum. 

• Movements in oil prices, currency fluctuations, and potential new U.S. tariffs. 

Portfolio Adjustments in April

During April, portfolio changes were made selectively with a focus on redeploying cash, strengthening yield, enhancing international diversification and increasing growth. The following adjustments were implemented: 

• Reduced gold exposure from 5% to 4% following robust gains. 

• Increased allocation to Dynamic Alternative Yield from 5% to 8%. 

• Lowered Dynamic Premium Yield exposure from 10% to 8%. 

• Boosted Global Innovators position 

• Added a Smart Data International Equity Fund with a 2% allocation. 

• Decreased overall cash exposure from approximately 27% to 20% by month-end. 

Bottom Line

Although markets have shown improvement, we maintain a disciplined and balanced approach. Economic growth remains below the typical pace, inflation is closely watched, and volatility may persist in response to shifts in interest rates, oil prices, and international events. We continue to prioritize: 

• High-quality, dividend-paying companies 

• Income generation 

• International diversification 

• Opportunities in infrastructure and energy 

• Long-term growth balanced with prudent risk management 

If you have any questions or need anything, please remember we are always here for you. 

With Kind regards,  

Your SilverBirch Wealth Management Team