Overview

Global markets weakened in Q1 2026 as the Middle East conflict, a sharp rise in oil prices, the repricing of interest-rate expectations, and a broad rotation away from AI-exposed technology stocks weighed on risk assets. Emerging markets and non-US developed equities outperforming the US. Value stocks demonstrated greater resilience, supported by a rally in energy stocks following US and Israeli strikes against Iran. The shock to the global economy will depend on the magnitude of how high energy prices rise and for how long.

Prior to the energy shock, we saw a ‘goldilocks’ scenario, underpinned by easing inflationary pressures that supported an accommodative monetary policy and relatively benign financial conditions. Whilst the Iran conflict has challenged this narrative, some key fundamental drivers still appear solid. For example, the ongoing AI boom and the related pickup in productivity growth as well as expansionary fiscal policy are likely to continue to be supportive of growth.

In light of this, the ELCIC pension plan returned 0.92% for the first quarter of 2026, beating its benchmark by 0.40%. Since inception of the mandate in March 2025, the total plan has returned 10.39% annualized.

Canadian equities

The Canadian equity market finished Q1 with positive returns amid a volatile quarter. The S&P/TSX Composite Index gained 3.9%, outperforming many global peers as commodity-linked sectors rallied sharply while cyclical and growth-oriented sectors lagged. The top performing sectors for the quarter were energy (+30.1%), utilities (+11.2%) and materials (+10.7%), while information technology (-22.5%) was the biggest decliner.

Canadian equities in the Growth portfolio gained over 6%, outperforming the benchmark by more than 2% in Q1. This was due primarily to stocks in the energy and industrials sectors and an underweight to software companies.

Global equities

Global stock markets shifted from early optimism around AI-driven growth to a risk-off environment driven by the Iran conflict, which pushed oil prices near $115 per barrel and reignited inflation fears. Emerging markets finished modestly positive, materially outperforming developed market benchmarks as commodity and semiconductor related stocks rallied early in the quarter before a March pullback. Global small cap equities showed relative resilience, outperforming their large cap peers, supported by improving earnings momentum, attractive relative valuations and a rotation into domestically oriented, value sensitive names.

Emerging markets and global small cap stocks performed well for the Growth portfolio, gaining 3.8% and 2.0%, respectively, for the quarter. Global equities were down -2.19% for the quarter.

Fixed income

Canadian bond yields were volatile but finished the quarter slightly higher overall with a slight flattening of the yield curve. In February, we saw a drop in rates due to the risk-off sentiment building in the market followed by a rise in rates in March due to the potential inflationary pressures from oil prices. The Bank of Canada held rates steady during the quarter given the heightened market volatility surrounding the geopolitical climate.

Canadian universe bond yields increased by 14 basis points for the quarter, resulting in a 0.21% return for Universe bonds in the Fixed Income portfolio. Canadian credit spreads widened over the quarter due to the overall risk-off environment. Similarly, global high yield spreads and global investment grade spreads also widened for the same reasons. As a result, both corporate bonds and growth bonds were slightly positive in the quarter, returning between 0.30% and 1.16%.

Celiac Awareness month, recognized each May, is dedicated to increasing understanding of Celiac disease and supporting those affected by it. Celiac disease is an autoimmune condition in which eating gluten — found in wheat, barley, and rye — causes damage to the small intestine. This month helps to highlight the importance of recognizing symptoms, which can range from digestive issues to fatigue and nutrient deficiencies, and encourages people to seek proper testing and diagnosis.

Raising awareness is important because many individuals with Celiac disease remain undiagnosed or misdiagnosed for years. By sharing information and promoting education, Celiac Awareness Month helps people better understand the condition and the need for a strict gluten-free diet to manage it.

It also encourages greater support, improved food labelling, and more inclusive options, making it easier for those with celiac disease to live healthy, confident lives.