Canadian and global equity gains expected, diversification and earnings growth top strategy calls
Edward Jones Canada is forecasting continued positive returns for Canadian investors in 2026, even as geopolitical tensions, inflation uncertainty and shifting monetary policy remain key risks.
The firm’s outlook suggests that resilient corporate earnings and disciplined portfolio construction will be critical in sustaining market momentum as the economic cycle matures. Earnings growth is expected to be the primary driver of returns next year, as valuation expansion becomes more limited following several years of strong market performance.
The firm anticipates ongoing economic growth in Canada and the US, alongside a more stable interest rate environment, which it believes should support equity markets.
The outlook points to broad-based earnings growth across sectors, including expectations for double-digit profit increases among companies in the S&P/TSX Composite Index. In the US, earnings growth is also projected to remain solid, reinforcing the case for maintaining equity exposure despite elevated uncertainty.
Edward Jones emphasizes diversification as a central strategy for advisors navigating 2026. The firm highlights opportunities beyond North America, noting that markets in Europe and Japan could benefit from improving economic conditions, supportive policy environments and attractive valuations relative to US equities.
Diversifying across regions, sectors and market capitalizations is positioned as a way to manage risk while capturing multiple sources of return.
While the outlook remains constructive, the firm cautions that several downside risks could disrupt markets including the possibility that AI-driven productivity gains fail to materialize as expected, as well as the risk that inflation proves more persistent, forcing central banks to maintain restrictive policy for longer.
Fixed income is expected to continue playing a stabilizing role in portfolios. Although bond yields are forecast to remain range-bound, the outlook notes that income generation and diversification benefits remain attractive for investors seeking balance amid equity market volatility.
For Canadian investors, key takeaways are:
- maintaining globally diversified portfolios
- reducing excess cash allocations to capture long-term return potential
- overweighting intermediate- and long-term investment-grade bonds given their income potential.
