By Scotia Wealth Management - The Zukiwsky Group

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Market Watch – February 27, 2026

Feb 27, 2026 | 5:23 PM

This week’s highlights

• AI disruption and rising inflation temper optimism
• Global rates adjust to inflation signals and anticipated policy shifts
• Canada’s economy contracted in the fourth quarter of 2025
• U.S. consumer confidence improves modestly in February
• German consumer confidence weakens as geopolitical uncertainty reigns

Week in review

AI disruption and rising inflation temper optimism

U.S. equities began the week under pressure as the administration’s tariff hike to 15% and the Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) duties injected uncertainty, weighing on risk sentiment and legacy tech while IBM’s sharp selloff added further drag. Markets briefly firmed mid‑week as investors awaited Nvidia’s results and digested improving consumer confidence, but optimism faded when Producer Price Index (PPI) inflation surprised to the upside, pushing yields lower. In Canada, equities tracked U.S. swings while softer‑than‑expected GDP and inventory‑related volatility limited follow‑through. European markets were broadly constructive early on, supported by strong corporate earnings, before losing momentum on firmer inflation prints. In China and broader EM, mixed tech performance and uneven post‑holiday trading kept gains contained.

wanted after failing to appear

UPDATE: Red Deer RCMP make arrest of Swan Hills man sought since failure to appear

2h ago

29-year-old red deer resident

Red Deer Mounties arrest man for alleged assault

2h ago

Crime

Alberta woman sentenced to eight years for killing of girl found in hockey bag

3h ago

Highlights:

• U.S. equities returned -0.43%1, fluctuating as escalating tariff uncertainty, tech weakness tied to AI disruption, and hotter-than-expected PPI data pressured sentiment despite strong megacap earnings and a mid-week boost from firmer consumer expectations.
• Canadian equities returned 1.58%2 despite U.S. volatility, with weaker-than-forecast GDP driven by inventory swings and subdued domestic investment tempering early-week gains, even as consumption and exports strengthened into year-end.
• European stocks returned 1.31%3, initially lifted by earnings strength and selective sector gains, but sentiment turned cautious as firmer inflation in France and Spain reinforced expectations for a more hawkish ECB policy.
• Emerging markets increased 0.91%4 with holiday-related reopening dynamics, pressure on Hong Kong tech shares, and subdued mainland momentum contrasting with modest rebounds elsewhere in Asia.

Global rates adjust to inflation signals and anticipated policy shifts

U.S. rates traded defensively through the week as tariff uncertainty and shifting inflation expectations kept yields more sensitive to risk sentiment, with investors initially leaning toward safe‑haven duration before mid‑week consumer confidence data and firmer inflation expectations nudged yields higher. Canada’s curve moved in parallel, with modest early week declines giving way to slight upward pressure before Friday’s softer‑than‑expected GDP print tempered moves, as markets looked through inventory driven volatility. The weakness in risk assets also aided a flight to quality. European sovereign bonds held a mild bid for much of the week amid cautious policy expectations, though upside surprises in French and Spanish inflation later weakened the tone. Japanese yields rose on expectations of a more dovish Bank of Japan board, while other regional curves stayed largely tethered to global macro headlines.

Highlights:

• The 2- and 10-Year U.S. Treasury yields were 3 bps and 6 basis point (bps) lower, respectively. In Canada, the 2- and 10-year yields were flat and 5 bps lower, respectively. Bond yields and prices move inversely to one another.
• Sovereign debt traded on shifting macro signals, with U.S. yields pressured by tariff uncertainty and firmer inflation expectations, while Canada, Europe, and Japan saw curves rise modestly to softer GDP, mixed inflation data, and dovish BoJ developments.
• Investment grade and high yield credit sentiment tracked broader macro dynamics, benefiting early from defensive positioning and stable earnings before late week inflation surprises and uncertainty around AI‑related investment cycles tempered risk appetite across higher beta segments.

Weekly dashboard

Canada’s economy contracted in the fourth quarter of 2025

Canada’s economy contracted in the fourth quarter, coming below expectations, as manufacturers heavily dipped into their inventories to meet demand instead of producing fresh goods, data showed. According to Statistics Canada (StatCan) gross domestic product (GDP) contracted at an annualized pace of 0.6% in the October-December quarter, compared with a revised 2.4% increase in the prior quarter.

Highlights:

• This brings the country’s overall growth in 2025 to 1.7%, the slowest pace of annual growth since the decline in 2020, StatCan said.
• Even though exports, household spending and government investment aided growth, it was not enough to offset the big dent caused by the impact of inventory drawdown last quarter as businesses withdrew $23.46 billion from their inventories.
• Besides inventory impact, investments into building of apartments, condos and houses were the only other major factor that pulled the GDP down in the fourth quarter, with residential structure investment falling by an annualized 4.4% in the fourth quarter.

U.S. consumer confidence improves modestly in February

The American consumer’s confidence in the U.S. economy improved slightly in February. The U.S. Conference Board reported that its consumer confidence index rose to 91.2 in February from an upwardly revised 89 last month. A measure of Americans’ short-term expectations for their income, business conditions and the job market rose four points to 72, remaining well below 80, the marker that can signal a recession ahead. It was the 13th consecutive month that reading has come in under 80.

Highlights:

• Respondents’ references to prices and inflation were little changed but remain elevated. Mentions of trade and politics increased, while references to labour market conditions eased as perceptions of the job market improved modestly.
• According to the survey, consumers’ plans to buy big-ticket items over the next six months rose, with plans to buy used cars, furniture, TVs and smartphones leading the way.
• Home-buying expectations were little changed in February, generally a slow time for the housing market, which has been mired in a yearslong slump.

German business sentiment strengthens as early signs of recovery emerge

Sentiment among German companies strengthened in February as the ifo Business Climate Index – a survey of 9,000 German businesses – improved, reflecting better assessments of current conditions and more optimistic expectations. Manufacturing and services showed notable gains, with logistics also rebounding. Construction confidence continued to firm, supported by improved outlooks despite a slow recovery in orders. Only the trade sector softened slightly, as weaker retail sentiment offset modest wholesale improvements.

Highlights:

• The ifo Business Climate Index rose to 88.6 from 87.6, driven by companies reporting greater satisfaction with their current situation and modestly improved expectations, suggesting early signs of economic stabilization.
• Manufacturing saw another increase, supported by significantly better evaluations of current business conditions, improving order trends, and an upward shift in production planning despite slightly weaker expectations.
• Services and construction both reported improved business climates, with service‑sector expectations rising and construction firms more positive about both current activity and future conditions, though construction orders are recovering only gradually.

1  S&P 500 Index USD

2 S&P/TSX Composite Index USD

3 Bloomberg Developed Markets ex N. America Large & Mid Cap Price Return Index USD

4 Bloomberg EM Large & Mid Cap Price Return Index USD

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