Relief Rally on the Horizon?
Exploring the sectors likely to gain – or stumble – if tensions ease.
Markets on both sides of the 49th parallel have been rattled by escalating Middle East tensions. With a potential ceasefire on the horizon, investors are watching closely to see which sectors could gain – or stumble – if hostilities ease.
When Markets Stop Shrugging It Off
The US/Israel-Iran conflict, which began on February 28, is now about to enter its fifth week as you read this. Despite reports of back-channel peace talks, there are still no clear signs of an end in sight. In my March 6, 2026, Weekly Update, I focused on how a short conflict – what was initially expected – could affect markets. This week, the bigger question is what happens if it lasts longer.
Stagflation: What It Is and Why Markets Are Paying Attention Right Now
The last few weeks, I’ve been seeing the term “stagflation” pop up more and more to describe the situation Canada – and to a lesser extent the US – may find themselves in over the coming months. At a basic level, inflation is when the overall cost of living rises over time, meaning your money doesn’t go as far as it used to. Most central banks, including the Bank of Canada (BoC) and the Federal Reserve (Fed), aim for around 2% inflation per year, which is considered healthy for a growing economy. A recession, on the other hand, is when economic activity slows down – businesses earn less, hiring weakens, and unemployment begins to rise. But what exactly is stagflation? This week, I thought I’d take a closer look.
If the Conflict Stays Short, These Sectors Could Move Most
Last week [link to Mar 6] I looked at the recent US and Israeli strikes on Iran from an investor’s perspective. The situation is still evolving, but one of the key questions for markets is how long the conflict might last. If the fighting remains relatively short – perhaps four to five weeks – history suggests the economic impact would likely be uneven rather than universally negative.
Geopolitical shocks tend to push markets into a brief “risk-off” phase where investors shift away from more cyclical or economically sensitive sectors and toward industries that benefit directly from higher energy prices or global uncertainty. The result is often a temporary reshuffling of winners and losers across sectors rather than a lasting change to the overall economic outlook. This week, I’ll discuss how a four-to-five week conflict could impact three of the key sectors that move the markets in Canada, as well as three that drive the US market.
Oil Surges, Volatility Returns
In February, artificial intelligence (AI) optimism and anxiety were the main winds that buffeted the markets (and buffet they did 😊). But as the month closed, a very different storm rolled in. Geopolitical tensions in the Middle East escalated sharply, shifting investor focus from AI concerns and earnings reports to energy supply and global stability.
February was a choppy month for the markets – or, as I like to call it, the month disrupted… by AI 😊. After a solid start, swings in artificial intelligence (AI) sentiment and broader economic worries became the defining themes, showing up differently across the four major North American indexes.