Market and economic commentary
June 2026

June Market Overview

June was a month of consolidation. After one of the sharpest two-month rallies on record, equities paused rather than reversed, and market leadership finally broadened beyond the largest artificial intelligence ("AI") names. The Compass Portfolios and all the ATBIS Pools (the Funds)¹ closed positive. Up-to-date performance data for the Funds can be found here.

Below are index one-month total returns in Canadian dollar (CAD) terms for June 30, 2026:

From chasing leaders to absorbing gains

June was quieter than May, and understandably so. The S&P 500 had risen roughly 15% in the two prior months, a 99th-percentile move since 1980 and one of the steepest on record. A rally that steep does not need bad news to slow; it needs time to consolidate. Most major index still finished positive in Canadian terms, but the character of the month shifted from chasing the leaders to absorbing prior gains.

Equal weight takes the lead

The more important development was beneath the surface, where leadership broadened. At month-end the equal-weight S&P 500 was up 12.0% year-to-date, ahead of the cap-weight index at 10.1%. This reversed May’s trend, when equal weight trailed by 1.8%. Participation improved alongside it, with 61.9% of S&P 500 members closing June above their 50-day moving average, up from 54.9% in May and 56.4% in April. The driver was a sharp late-month rotation out of the momentum winners and into laggards. That rotation may also explain the leadership table, with EAFE (+2.5%) at the top as Europe outperformed and the momentum leaders that had driven the rally gave back ground.

The earnings engine behind the AI trade

Broader participation did not signal the end of the AI trade—it marked a widening of it. Earnings remain the engine. Over the past year, the S&P 500 rose about 18% with no increase in valuation—the forward P/E held at 20x, unchanged from a year earlier. Consensus expects 22% earnings growth in Q2, the highest bar entering a reporting season since 2021². However, that growth is concentrated, with AI infrastructure companies expected to deliver nearly 60% of it. Meanwhile, the median company is expected to grow earnings by 9%. More of the market is participating in price, while a small group still drives the profits. 

The macro backdrop turned more supportive. Oil, the market's principal concern since winter, fell as WTI declined from roughly $93 in early June to the high $70s by month-end. Inflation eased at the margin, with May core CPI rising 0.2% month-over-month, down from 0.4% and below the 0.3% expected. With energy lower and core cooling, the prospect of a Federal Reserve rate increase that markets had begun to price in the spring receded. Chair Warsh's first meeting left policy unchanged at 3.50%–3.75% and the US 10-year yield fell from 4.7% in May to 4.4% at month-end, allowing both equities and bonds to finish higher.

A second theme continued to build—the AI trade is beginning to shift from private-market scarcity to public-market supply. Anthropic filed to go public on June 1, Alphabet raised roughly $80 billion of equity during the month, and SpaceX and OpenAI remain widely anticipated. New share supply is a technical consideration—more stock for the market to absorb—rather than a judgment on the businesses themselves, but it is worth monitoring because it shifts the balance of buyers and sellers.

Looking ahead to the Q2 corporate scorecard

In summary, June was a transition. May showed the market could rebound sharply; June showed it could broaden and consolidate while inflation pressure eased and yields fell. The rally still rests on earnings, and on AI infrastructure in particular. That places the burden on the Q2 reporting season, which begins in mid-July, to confirm the profit growth that has justified the advance.

Compass Portfolios Series F1 - Returns net of fees (%)

ATBIS Pools Series F1 - Returns net of fees (%)

ATB Monthly Income Portfolio Series F1 - Returns net of fees (%)

¹ Using F series returns
² Factset, ATBIM