May 2026 market update

Global markets are climbing but rising inflation, high energy costs, and cautious consumers tell a more complicated story. What do these shifts mean for the economic outlook ahead?

June 4, 2026

Introduction

Global equity markets moved higher over the month of May. While the U.S. and Iran were unable to complete a peace deal, the two sides continued to negotiate and largely maintained their agreed-upon ceasefire. Oil prices finished lower over the month but remain elevated, putting upward pressure on inflation in countries around the world.

Inflation in Canada, the U.S. and Europe, among others, was reported to have surged higher, and began putting pressure on consumers and businesses, who showed a bit more cautiousness with spending. Late in May, it was reported that Canada’s economy shrank in the first quarter of 2026, pushing the economy into a technical recession. Gross domestic product (GDP) reports from several countries showed lacklustre growth in the quarter. Data from the second quarter of 2026 show economies hurting from higher prices, lower confidence and slower global economic activity.

The S&P/TSX Composite Index advanced in May, reaching a new record high along the way. The communication services sector was the top performer over the month, offsetting weakness in the health care sector. U.S. equities posted a solid gain over the month. The 10-year Government of Canada bond yield edged lower over the month, while the yield on the 10-year U.S. Treasury bond inched higher. The price of gold finished lower.

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