Insurance, Investments and Group Benefits

The investment landscape for the second half of 2026 is defined by a paradox: a world navigating the severe geopolitical shocks of the war in Iran while simultaneously witnessing an unprecedented acceleration in AI infrastructure and the commercialization of space.

The de facto closure of the Strait of Hormuz earlier this year has caused a spike in energy prices around the world, as many countries are already grappling with an affordability crisis. As we enter the second half of the year, these are some of the key themes we continue to monitor. 

Join Paul Holba, President and CIO, Empire Life Investments Inc., as he analyzes shifting global markets in the second half of 2026, offering insights on inflation shocks, trade tensions, and active portfolio management.

Annual update discusses potential headwinds for the Canadian and U.S. economies in 2026 as well as projections for corporate bond spreads in the new year, and how AI spending will continue to impact the debt markets. 

Although tariff uncertainty still exists, we recognize some pockets of growth and resilience in global equities. We will continue to monitor tariffs and geopolitical developments, however, there are some emerging global themes that leave us feeling encouraged.

As we head into the new year, tariff and trade uncertainty remain a key issue. There has been some real progress through 2025, but an agreement has remained elusive between the U.S. and some of its key trading partners (such as Canada and Mexico), and we have seen flareups and cool-downs in trade tensions with China. 

Uncertainty around tariffs remains a sticking point for the Canadian economy as 2025 comes to an end. The banking sector has maintained resilience as we close out the year, and gold has  continued to rally. The S&P/TSX was one of the strongest indices in the developed market, up nearly 30%¹, with sectors such as Materials, and Financials leading the way. 

2025 was a year of transition characterized by both global uncertainty and resilience. Ongoing geopolitical conflicts and trade tensions drove market volatility throughout the year, and we expect these uncertainties to carry over into the new year. However, there are a number of emerging themes that leave us feeling encouraged.

As we turn the page to 2026, our focus remains on navigating challenges and uncovering opportunities that drive long-term growth.

Here are some of the global themes we believe will impact markets in the new year.

Join Paul Holba, President and CIO, Empire Life Investments Inc., as he navigates the 2026 market outlook where geopolitical volatility and persistent inflation persist, while AI drives growth, and key themes emerge across fixed Income, equities, and the rise of "Global Champions".

Paul Holba, President and CIO of Empire Life Investments Inc. discusses some of the key themes the investment team will monitor as we head into the second half of 2025.

Investing in Canadian dividend equities has proven to be a successful strategy over the long run for our segregated fund portfolio managers. In addition to demonstrating favourable downside protection¹ and diversification benefits, Canadian dividend equities have outperformed the broader Canadian equity market over the long term.