Monarch Wealth

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Market Update:
Reading Beyond the Noise

What’s Really Driving Markets Right Now?

If you follow the financial news, there is always something to worry about: interest rates, inflation, government policy, geopolitical tensions or whether certain parts of the market have become too expensive.

Those concerns are real—but they are not the whole story.

We recently heard from Denise Chisholm, Fidelity’s Director of Quantitative Market Strategy. Her message was refreshingly straightforward: underneath the noisy headlines, the economy and corporate sector continue to show considerable strength.

Here is what that could mean for investors.

The economy is holding up better than many people think

Interest rates and inflation tend to dominate the news, but markets are ultimately driven by whether businesses are growing and making money.

Right now, corporate profits remain healthy, companies continue to invest in their businesses, and demand for major purchases and equipment remains resilient. Together, these are signs that the economy continues to have a solid foundation.

That does not mean markets will rise in a straight line. They never do. But it does mean there are good reasons to remain invested rather than allowing short-term worries to derail a long-term plan.

Investors are nervous—but the data is more encouraging

There is still a great deal of caution among investors, particularly around interest rates and the possibility of an economic slowdown.

However, several of the indicators Fidelity monitors suggest that the financial system is not showing the level of stress we would normally expect before a major downturn. In other words, people may be feeling more worried than the underlying data currently justifies.

That difference between sentiment and reality can create opportunities for patient investors.

Artificial intelligence is more than a passing trend

There has been enormous excitement around artificial intelligence, and some of it has undoubtedly been overdone. However, the actual investment taking place is very real.

Companies are spending heavily on data centres, computer chips, software and other infrastructure needed to support AI. Over time, these investments could help businesses become more productive, develop new products and operate more efficiently.

This does not mean every company with an “AI story” will be a successful investment. Careful research still matters. But Fidelity believes the broader AI investment cycle has the potential to support economic and earnings growth for many years.

Opportunities may be expanding beyond technology

Technology companies have attracted much of the attention in recent years, but they are not the only area showing promise.

Manufacturing activity is improving, businesses are placing more orders, and demand for equipment and other long-lasting goods remains healthy. That is creating a more favourable environment for industrial companies—the businesses that build, manufacture, transport and support the infrastructure of the economy.

This matters because a healthy market should not depend forever on a small group of technology companies. Broader participation across different industries can create a more durable investment environment.

A great company is not always a great investment

One of Denise’s most important reminders was also one of the simplest: the price you pay matters.

A company can have a wonderful business and exciting prospects, but if its share price already assumes everything will go perfectly, it may still produce disappointing returns.

Fidelity therefore looks for investments that offer a sensible combination of business quality, earnings potential and a reasonable price. This is particularly important when enthusiasm is concentrated in the market’s most popular companies.

What could change the outlook?

Fidelity remains constructive, but not complacent.

One of the areas its team watches closely is the credit market—the market in which companies borrow money. When lenders suddenly demand much higher interest rates from businesses, it can be an early sign that financial conditions are deteriorating.

You can think of widening credit spreads as a possible “check engine” light for the economy. That warning light is not flashing today, but it is an important indicator Fidelity continues to monitor.

What this means for your portfolio

The current picture is encouraging, but it is not a reason to chase recent winners or make dramatic changes based on a market forecast.

Instead, it reinforces several principles that guide how we manage wealth:

• Remain invested through normal periods of uncertainty.

• Diversify beyond the most popular areas of the market.

• Focus on the quality and long-term potential of the investments you own.

• Be mindful of how much you are paying for that potential.

• Adjust when the evidence changes—not simply when the headlines become uncomfortable.

Our job is not to predict every market movement. It is to build and maintain a portfolio designed around your goals, time horizon, income needs and comfort with risk—and to work with skilled investment managers who can find opportunities while carefully managing risk.

Manager spotlight: Fidelity Investments

Fidelity is one of the specialist investment managers we have selected to manage a portion of many of our clients’ portfolios.

Fidelity Investments Canada serves more than 2.2 million Canadian investors and manages approximately $400 billion in assets as of June 2026. More importantly, its Canadian investment teams draw on a broad global network of portfolio managers, analysts and research professionals.

What particularly distinguishes Fidelity is the depth of its proprietary research. Its analysts examine businesses from multiple perspectives—including financial results, competitive position, customers, suppliers and industry conditions—to develop an informed view of each investment.

Fidelity also places a strong emphasis on long-term results. Portfolio-manager compensation is meaningfully tied to three- and five-year performance, helping align investment decisions with the longer-term outcomes that matter to our clients.

We believe Fidelity brings several important strengths to our investment-management process:

• Deep, proprietary research

• Experienced portfolio managers with global resources

• A disciplined approach to valuation and risk

• The ability to actively seek opportunities as market conditions change

• A long-term investment philosophy that complements our own approach

We do not rely on any single firm, forecast or investment style. Instead, we carefully select and combine professional managers whose expertise can contribute to a well-diversified portfolio. Fidelity is one of the high-quality investment partners helping us carry out that work.

Would you like to review your portfolio?

If you have questions about the markets, Fidelity’s role in your investments or how your portfolio is currently positioned, please reach out to our team.

We would also be pleased to arrange a portfolio review to make sure your investments continue to reflect your goals, income needs and any recent changes in your life.

As always, we appreciate the trust you place in us.

Cheers,

  –  Matthew
 

This commentary is provided for general information only and should not be considered personal investment advice. Each client’s portfolio is constructed according to their individual circumstances and objectives. Investment funds are not guaranteed, their values change frequently, and investors may experience a gain or loss. Past performance may not be repeated.