Market Watch — April 17, 2026

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U.S. equities started the week mostly positive, with only brief intraday pullbacks after failed U.S.–Iran talks, higher oil prices, and renewed inflation concerns following last Friday’s firm Consumer Price Index (CPI) print weighed on sentiment. Markets later found traction as hopes for resumed negotiations emerged and March Producer Price Index (PPI) surprised to the downside, easing near‑term inflation fears. Supportive jobless claims and early earnings strength in banks and large-cap technology reinforced the mid- to late-week rebound despite lingering policy uncertainty. Canadian equities tracked global risk appetite, pressured early by geopolitical risk but later steadied as macro data remained orderly and easing conflict concerns improved sentiment. In Europe, equities lagged as higher energy costs and disappointing luxury earnings overshadowed limited regional data, before stabilizing as oil prices moderated. Chinese and emerging market equities fluctuated but found support in stronger-than-expected Q1 GDP and industrial production, offsetting weak retail sales and softer trade data.

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Highlights:

• U.S. equities returned 4.55%1 shaped largely by geopolitics, but a softer-than-expected PPI report, stable jobless claims, and strong earnings from banks and technology helped calm inflation concerns and underpin risk appetite as the week progressed.
• Canadian equities returned 1.93%2 initially pressured by geopolitical uncertainty, but supported later by steady domestic data expectations, easing energy price pressures, and improved sentiment as risks around inflation and growth appeared contained.
• European stocks returned 2.10%3 facing early headwinds from elevated energy costs and weak luxury sector updates, with limited regional data to offset concerns, before stabilizing as oil prices eased and broader macro fears around inflation moderated late in the week.
• Emerging markets rose 2.44%4 after a stronger-than-expected Q1 GDP and industrial output helped offset disappointing retail sales and weaker exports, while cautious optimism around global growth and energy prices supported sentiment.

Energy concerns push yields higher before reversing on tentative ceasefire

U.S. rates moved higher early in the week as the escalation in Middle East tensions drove crude prices sharply higher and reinforced concerns that energy‑led inflation could delay easing, before Treasuries found support after March PPI came in softer than expected and jobless claims remained contained. Yields later edged lower as geopolitical risks moderated and markets reassessed the persistence of inflation pressure. Canadian yields largely mirrored U.S. moves, with limited domestic data leaving markets primarily driven by global energy dynamics and shifting central‑bank expectations. In Europe, sovereign bonds initially sold off amid higher energy prices but rallied mid‑week as optimism for a ceasefire and renewed energy shipments emerged and growth risks were underscored by weaker sector-level news and IMF downgrades.

Highlights:

• The 2- and 10-year U.S. Treasury yields were up 1 basis points (bps) and 4 bps, respectively. In Canada, the 2- and 10-year yields were up 2 bps and 5 bps, respectively. Bond yields and prices move inversely to one another.
• Sovereign bonds sold off early as the Middle East oil shock lifted inflation expectations, before softer U.S. PPI, stable jobless claims, and easing conflict risks allowed yields to retrace modestly late week.
• Investment‑grade and high‑yield credit proved resilient, supported by constructive early earnings and a calmer rates backdrop, with limited spread widening despite elevated energy prices and lingering geopolitical uncertainty.

Weekly dashboard

Canadian manufacturing sales recover to post 3.6% gain in February

Strength in the auto sector helped boost both manufacturing and wholesale sales in February as several auto assembly plants ramped up operations following planned maintenance and retooling shutdowns. According to Statistics Canada (StatCan), manufacturing sales rose 3.6% to $71.2 billion in February following a drop of 3.1% in January. In a separate report, StatCan reported wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons, climbed 2% higher to total $86.8 billion in February.

Highlights:

• Manufacturing sales rose in 12 of the 21 subsectors, led by an 18.8% gain in transportation equipment as auto production increased.
• Sales in the machinery subsector also climbed higher as they increased 7.7% in February, while sales of primary metals hit a new record high, gaining 4.9% to $6.5 billion. Sales of chemical products fell 3.2% to $5 billion in February.
• Wholesale sales increased in five of the seven subsectors, with the motor vehicle and motor vehicle parts and accessories subsector up 6.1%. The food, beverage and tobacco subsector rose 2.9%, while personal and household goods gained 2.5% in February.

U.S. producer prices increase less than expected in March

U.S. producer prices increased less than expected in March as the cost of services was unchanged, but surging energy prices because of the war with Iran were fanning inflation pressures. According to the U.S. Labor Department’s Bureau of Labor Statistics, the Producer Price Index (PPI) for final demand rose 0.5% last month after a downwardly revised 0.5% gain in February. Economists had forecast the PPI accelerating 1.1% after a previously reported 0.7% gain in February.

Highlights:

• Most of the monthly gain came from goods rather than services. The index for final demand goods jumped 1.6%, its biggest monthly rise since August 2023, while prices for final demand services were essentially flat for the month.
• Nearly half of the goods increase was attributable to a 15.7% surge in gasoline prices; the energy component overall rose 8.5%, with diesel, jet fuel and home heating oil also contributing to the advance.
• The PPI measure that excludes foods, energy and trade services, a commonly watched core gauge, rose 0.2% for the month and 3.6% year-over-year, signalling persistent underlying price pressures.

China’s economy starts year on strong footing, but Iran risks loom

China reported accelerating economic growth to start the year, driven by robust exports, but shock waves from the Iran war threaten its momentum. China’s gross domestic product (GDP) expanded 5% in the first quarter of 2026 compared with a year earlier, up from 4.5% growth in the fourth quarter of 2025, according to government data. Trade helped drive much of China’s economic expansion, with exports surging 22% in January and February from a year earlier. But export growth slowed sharply in March, underscoring the risk of relying on global demand to boost the economy.

Highlights:

• Though the better-than-anticipated GDP print was a welcome surprise, China’s single-engine economy is vulnerable to a potential global economic slowdown caused by the Middle East conflict, and some of that impact has already begun to show up in the March data.
• In March, exports rose only 2.5% year-on-year against the median estimate of 8.6%, while imports climbed 27.8% led by purchases of high-tech products, causing China’s trade surplus to shrink to US$51.1 billion from US$91.0 billion.
• Beijing has in some ways prepared for a slowdown in growth. Earlier this year, it set its lowest annual growth target in more than three decades, aiming for GDP growth of between 4.5% and 5%.

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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