Launch Pad

Canadian retail sales showed solid momentum before the energy shock with advanced estimates showing a rise of 0.9% in February after a 1.1% gain in January, putting first-quarter growth on track for about 1.8% following a weak end to 2025. The gains were broad-based, led by strength in motor vehicle sales and general merchandise, while food and beverage sales declined. However, the data predates the Iran-driven rise in oil prices, which is expected to squeeze household budgets and likely shift spending away from discretionary goods as higher fuel costs and a softer labour market weigh on consumers. 

Canada, along with Japan and European countries signaled that they would help try to stabilize energy markets as the Iran war escalates, pledging to support efforts to secure shipping through the Strait of Hormuz and work with producers to boost supply. The move follows severe damage to key energy infrastructure, including Iranian strikes that cut roughly one-sixth of Qatar’s LNG export capacity and attacks on facilities across the Gulf, raising fears of a global energy shock. Oil and gas prices have risen significantly over the last 2 weeks, driving market volatility and raising inflation concerns, pushing global equities lower. Although these countries had previously resisted getting involved, the worsening disruption to energy flows and economic risks has prompted the response which looks to restore supply stability and limit a broader economic fallout. 

Despite the Iran war and a weak first quarter, strategists are noting that global financial markets have shown resilience, with investors hesitant to abandon stocks and bonds. This resilience reflects expectations that the recent conflict and oil disruptions may only be temporary. Adding to this, investors continue to have confidence in underlying drivers like AI-led growth, corporate earnings, and steady economic expansion. Still, the disruption to the Strait of Hormuz, impacting roughly 20% of global energy supply, poses a significant unknown, particularly how it will impact inflation and influence central bank policy. Rather than de-risking entirely, investors are focusing on diversification across sectors, regions and asset classes, maintaining a longer-term outlook. While investors appear to be treating the conflict as temporary, a prolonged disruption would likely force a broader repricing across financial markets, especially if higher commodity prices begin feeding more clearly into economic data. 

Shake up in global rate policy. It was a busy week for central banks, with major developed market central banks largely holding interest rates steady but striking a more hawkish tone, signaling readiness to act if the Iran war-driven energy shock leads to broader inflation. The Fed, Bank of England, European Central Bank, and Bank of Canada all paused policy while emphasizing inflation risks, prompting markets to scale back expectations for rate cuts and, in some cases, begin pricing in hikes. Australia stood out by continuing to raise rates, while other central banks including those in Norway and New Zealand are now also expected to tighten policy later this year. Overall, the global policy backdrop has shifted from easing toward caution or potential tightening, as policymakers weigh the inflationary impact of rising energy prices against slowing economic growth. 

The Iran conflict is creating a rise in global military spending, driving a sharp rally in defense stocks, adding more than $28 billion to the fortunes of major shareholders in the sector in just a few months. A Bloomberg index of defense companies is up about 18% in 2026, outperforming broader markets as governments accelerate spending on weapons, drones, and advanced military systems. Increased defense budgets across the U.S., Europe, Israel and Asia, alongside ongoing geopolitical tensions, have boosted revenues and valuations for both large contractors and emerging firms. The trend underscores how sustained geopolitical instability is reshaping capital flows, with defense becoming one of the few sectors benefiting from the recent market volatility. 

(Sea) snail mail. A man in Scotland discovered a message in a bottle that had traveled across the Atlantic from PEI, after his dog found it along a beach near Aberdeen. The bottle contained a French note written in August 2024 by Annie Chaisson, who said it was launched from a ferry between Prince Edward Island and Quebec’s Îles-de-la-Madeleine and invited the finder to contact her on Facebook. Although the finder’s wife believes she located Chaisson’s profile, there has been no response, possibly due to inactivity (hey 2 years is a long time). This isn’t the slowest bottle message on record though, after a bottle sent from Newfoundland in 2012 reached Ireland in 2025. 

Lost its lustre. Gold is heading for its biggest weekly loss in six years, as war in the Middle East boosted energy prices and reduced expectations for interest-rate cuts. Bullion is down more than -7% this week, the most since March 2020. Soaring crude, natural gas and fuel prices triggered by the conflict are raising inflation concerns, reducing prospects of central banks lowering rates. The retreat in gold has come as Treasury yields and the U.S. dollar gained ground, and investors selling bullion to cover losses elsewhere, and gold ETFs posted outflows, with global holdings erasing all their additions since the start of the year. The  Fed met midweek to assess policy, opting to leaves rates unchanged as widely expected. Chair Jerome Powell emphasized that to resume easing, officials would have to see progress in reducing inflation. Gold’s performance since the Iran war broke out looks to be echoing a decline in 2022, when Russia’s invasion of Ukraine caused an energy shock that rippled through global markets. That year, bullion posted a seven-month run of losses through October, the longest such streak on record.