Canadian equities outperformed sharply in February as commodity-linked sectors rallied. Materials stocks surged 21.7%, led by gold and copper miners, while Energy gained 8.8% as crude prices strengthened. The surge in resource sectors pushed the S&P/TSX Total Return Composite up 7.7% for the month, even as the S&P 500 declined 0.6%.
Precious and base metals drove much of the divergence between Canadian and U.S. markets. Rising gold and copper prices lifted mining companies across the TSX, while technology stocks moved in the opposite direction. The Information Technology sector fell 6.2%, reflecting pressure on growth valuations as bond yields moved higher and investors rotated toward commodity-linked and value-oriented sectors.
Benchmark | Jan-2026 | Feb-2026 |
|---|---|---|
S&P 500 Total Return | 0.6% | -0.6% |
S&P/TSX Total Return | 0.8% | 7.7% |
Source: FactSet
Global Market Overview
Inflation and labor market data continued to shape expectations for monetary policy in the world’s largest economy. Consumer prices rose 0.4% month-over-month, slightly above expectations, while the unemployment rate held near 4.1%. Treasury markets reacted by pushing the 10-year yield roughly 15bps higher, tightening financial conditions and weighing on rate-sensitive sectors. Growth-oriented equities lagged as investors reassessed the timing of potential interest rate cuts.
Developments in Asia were particularly relevant for global commodity markets during the month. Manufacturing indicators moved closer to the 50 expansion threshold, signaling stabilization in industrial activity after several weaker months. Policymakers also indicated continued support for infrastructure investment and domestic demand. The prospect of firmer industrial activity helped lift prices for metals such as copper and iron ore, supporting mining companies globally and contributing to the strong performance of commodity-heavy equity markets.
Canadian Market Overview
Canadian equities benefited from their heavy exposure to commodities and financials. The S&P/TSX gained 7.7% in February, supported primarily by strength in resource sectors as metals and energy prices moved higher, while financials also contributed to the advance. Economic data pointed to a gradual cooling in domestic activity: the unemployment rate rose to 6.8%, headline inflation held near 2.4% year-over-year, and retail sales showed uneven momentum following a 1.3% increase in November. Together, the data reinforce a cautious outlook for monetary policy as the Bank of Canada balances slowing growth with inflation that remains close to target.
Canadian Sector Performance
Materials: +21.7%
Driven by strong gains in gold and copper miners as precious and base metal prices rallied.Consumer Discretionary: +10.5%
Advanced as retail and consumer-facing companies benefited from resilient spending.Consumer Staples: +10.0%
Gained as investors favored defensive companies with stable demand and cash flows.
Important Dates
March 6: Canada Unemployment Data
March 12: U.S. CPI Inflation
March 18: Canada CPI Inflation
March 20: Bank of Canada Interest Rate Decision
March 27: Canadian Retail Sales
Portfolio Strategy Tip
February’s sharp divergence between Materials and Information Technology illustrates how quickly sector leadership can shift when macro conditions change. A single commodity-driven sector can dominate index performance, particularly in markets with concentrated exposures like Canada. When large sector moves push portfolio weights far from their targets, disciplined rebalancing helps prevent unintended concentration risk.
Final Thoughts
February highlighted the influence of commodities on Canadian equities. Strength in metals and energy drove the TSX higher even as U.S. markets softened under pressure from rising yields. The key question ahead is whether commodity momentum can persist or whether tighter financial conditions begin to weigh more broadly on global growth. Commodity prices and interest rate expectations will likely remain the primary drivers of sector leadership in the months ahead.