Modest Q1 gains mask a brutal quarter for global markets
Despite war, tariff chaos, and a tech selloff, Canadian pension plans still managed to stay in the black.
Recent Northern Trust Canada Universe data showed the median Canadian pension plan rose 0.4 percent in the first quarter of 2026, as geopolitical tensions, an energy-price shock, and trade uncertainty rattled global markets.
War in the Middle East and the closure of a critical energy supply passage sparked fears of a global supply shock.
A partial US government shutdown added to the turbulence, while technology stocks in North America fell sharply as investors weighed the implications of new artificial intelligence capabilities and rising capital investment in the sector.
Canadian equities led the way, with the S&P/TSX Composite Index rising 3.9 percent for the quarter.
Energy outpaced all other sectors on surging oil prices, while materials and utilities posted attractive double-digit returns.
Information technology was the largest decliner, falling more than 22 percent.
US equities, by contrast, declined 2.6 percent in CAD terms as measured by the S&P 500, with financials, consumer discretionary, and information technology posting the weakest results.
International developed markets edged up 0.7 percent in CAD as measured by the MSCI EAFE Index, while the MSCI Emerging Markets Index gained 1.7 percent in CAD, led by information technology and energy.
On the fixed income side, the FTSE Canada Universe Bond Index posted a return of 0.2 percent.
Federal bonds outperformed provincial and corporate issues, while mid-term bonds outpaced both short and long-term bonds.
The Bank of Canada held its benchmark rate at 2.25 percent at both meetings during the quarter, noting that risks to growth appear tilted to the downside amid weaker economic activity and elevated uncertainty around US tariffs.
The unemployment rate ended the quarter at 6.7 percent, down marginally from 6.8 percent in December, though more than 100,000 net jobs were lost over the period.
Major central banks elsewhere also held steady.
The US Federal Reserve kept the fed funds rate at 3.50–3.75 percent as policymakers navigated a soft labour market, above-expected inflation, and the US-Iran conflict.
The Fed governor said it was "too soon to know" the full economic impact of the war.
The European Central Bank held at 2.0 percent, the Bank of England at 3.75 percent, and the Bank of Japan at 0.75 percent — all citing energy-driven inflationary pressures.
The People's Bank of China held its one- and five-year loan prime rates at 3.0 percent and 3.5 percent respectively, while Brazil's central bank trimmed its Selic rate to 14.75 percent from 15 percent.
Katie Pries, country executive for Northern Trust Asset Servicing in Canada, said economies have stayed resilient despite a turbulent landscape.
Pension plans, she added, are securing long-term sustainability by staying "focused on key underlying data, their core principles and the sound investment strategies formulated by plan sponsors."
