On October 28 the Bank of Canada raised the overnight rate by 25 basis points to 2.50%, its first increase since 2023. Governor Tiff Macklem tied the move to oil prices above $100 a barrel and the risk that those costs would spread beyond energy. The Federal Reserve held the federal funds target range at 3.75%–4.00% the same afternoon. Crude lifted Canadian energy shares, gold miners fell for a second month, and a selloff in U.S. megacap technology pulled the S&P 500 down. The S&P/TSX Total Return rose 1.2%. The S&P 500 fell 0.9%.
WTI crude closed October at $104.12, up 12% from $92.87 at the end of September, and Canadian Energy rose 8.7%. Gold futures fell 6.9%, from $4,187 to $3,899, their lowest settlement in a year. Materials dropped 13.1% and was the only TSX sector to finish lower. In the United States, Telecom fell 15.1% and Information Technology fell 6.8% after large AI spenders reported heavy capital outlays and negative free cash flow. The 10-year Treasury yield fell from 5.28% to 4.93%. The Canadian dollar rose 1.8% to US$0.716.
Benchmark | Sep-2026 | Oct-2026 |
|---|---|---|
S&P 500 Total Return | -0.3% | -0.9% |
S&P/TSX Total Return | -2.6% | 1.2% |
Source: FactSet
Global Market Overview
United States
September consumer prices rose 0.6% on the month and 3.7% on the year. Gasoline rose 9.1% and accounted for about half of the monthly increase, and core inflation rose to 2.6%. The Fed held rates on a 10–2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack preferred a quarter-point increase. The advance estimate of third-quarter GDP, released October 29, showed growth of 3.4% annualized, up from 2.2% in the second quarter and ahead of the 3.2% consensus. Energy rose 14.0%. Telecom fell 15.1% after Alphabet dropped about 12% in a single session on a search-advertising miss and capital-spending guidance as high as $205 billion. Information Technology fell 6.8%.
Europe
Euro-area inflation rose to 3.8% in September from 3.2% in August, and energy inflation accelerated to 18.8%. On October 29 the European Central Bank left the deposit rate at 2.50% and the main refinancing rate at 2.65%. President Christine Lagarde said higher energy prices posed upside risks to inflation and downside risks to growth, and the Governing Council did not pre-commit to a rate path. The MSCI All Country World ex-U.S. index fell 2.8%.
Canadian Market Overview
The October Monetary Policy Report raised the Bank’s 2026 inflation forecast to 2.9%, 0.4 percentage points above the July projection, and the 2027 forecast to 3.1%. The Bank expects inflation above 3% through most of 2027, returning to the 2% target around mid-2028. Macklem said the policy rate was still not restraining growth, and that further increases could be required. Decisions will be taken one meeting at a time. The Bank puts the neutral range at 2.25% to 3.25%.
September CPI rose 3.1% year over year, up from 3.0% in August. Gasoline rose 27.8%, while inflation excluding gasoline slowed to 2.2%. Employment fell by 68,000 in September, a second straight monthly decline, and the unemployment rate rose to 6.5%. Real GDP was essentially unchanged in August, also for a second month, while retail sales rose 1.2%. Nine of ten TSX sectors finished higher. Energy, Staples (+6.4%) and Discretionary (+5.9%) outweighed the drop in Materials, and the index gained 1.2%.
Canadian Sector Performance
Energy: +8.7%. WTI’s rise to $104.12 reversed September’s 3.7% decline in the sector. The Strait of Hormuz was largely closed to oil tankers, and crude held above $100.
Utilities: +5.3%. The drop in the 10-year Treasury yield, from 5.28% to 4.93%, eased the discount-rate pressure that hit dividend stocks in September, when the sector fell 2.5%.
Info Tech: +2.0%. The sector rose while S&P 500 technology fell 6.8%. Canadian technology was spared the selloff in the largest U.S. AI spenders.
Materials: -13.1%. Gold’s 6.9% decline to $3,899, a one-year low, hit miners harder than the metal. The sector had risen 26% in August and fallen 7.4% in September.
Important Dates
November 6: Canada Labour Force Survey (October)
November 6: U.S. Employment Situation (October)
November 10: U.S. CPI Inflation (October)
November 16: Canada CPI Inflation (October)
November 20: Canadian Retail Sales (September)
December 9: Bank of Canada policy decision and Federal Reserve FOMC decision
Final Thoughts
October split the oil shock from the gold trade. Crude above $100 strengthened the Bank of Canada’s case for a hike and gave the TSX an energy cushion large enough to absorb a 13.1% drop in Materials. The 10-year Treasury yield retreated from September’s 5.28% high, helping utilities recover, while U.S. megacaps fell as investors focused on heavy AI spending and cash burn. December 9 brings the Bank of Canada and Federal Reserve decisions on the same day. Macklem has left the door open to another increase, but consecutive employment losses and flat August GDP argue for caution. For the TSX, continued leadership will depend heavily on whether crude can remain above $100.