There was a lot to digest in the market during the month of August, but three things stood out the most. First, global equity markets continued to show remarkable resilience, climbing higher despite ongoing tensions in the Middle East and oil prices hovering around US $90 per barrel. Second, corporate earnings remained a key source of support for markets. Another blockbuster report from Nvidia helped cap off a strong second quarter earnings season, and reinforced the view that business fundamentals do remain healthy.
And third, bond markets delivered an important message. Expectations for interest rates moved higher following Kevin Warsh’s hawkish speech at the Jackson Hole conference. While the US Treasury surprised investors by expanding its longer dated bond buyback program, adding another layer to an already evolving interest rate landscape. Now taken together, August was a reminder that while headlines remain noisy, markets continue to be driven by a combination of economic resilience and strong corporate profits, shifting expectations for interest rates as well.
Let's dig into each of these topics just a little deeper. The resilience we highlighted earlier was certainly evident in Canada. The Canadian stock market gained 3.1% in August, while Canadian small caps were even stronger, rising 6.7%. What was particularly encouraging was the breadth of the rally. Materials led the way, driven by strength and precious metals and mining companies, as investors continue to favor gold and silver related businesses.
Technology was another standout performer, helped in large part by Shopify, which rose 24% during the month. Shopify remains a meaningful holding in our Canadian equity income strategy, where it represents approximately 5% within the portfolio. The energy sector also delivered strong returns, gaining 2.4% as oil prices responded to ongoing conflict in the Middle East and after a difficult stretch over the past year.
Canadian telecom companies finally showed signs of stabilizing, with the communications services sector advancing 3.9% in August. While, it's probably still too early to declare a full turnaround. It's encouraging to see that the group is beginning to move in the right direction. The US market also delivered solid gains in August, rising 1.5%, still slightly trailing the Canadian market. Similar themes emerge south of the border, with leadership coming from the more cyclical sectors tied to economic growth and commodity demand.
Energy led the way, advancing 7.4%, followed closely by technology at 6.4% and materials up 4.6%. Taken together, the strength across both Canadian and US markets suggested that investors remain focused on healthy corporate fundamentals despite the ongoing geopolitical and interest rate related uncertainty. So where did this resilience come from? A big part of the answer lies in our second theme for August, which was corporate earnings.
Despite concerns around interest rates and geopolitics, as mentioned, companies continue to deliver strong earnings results. While the strongest earnings growth came from energy and technology related businesses, one of the more encouraging developments was that earnings strength began to broaden beyond just a handful of sectors and even just a handful of companies, in other words, and we've talked about this earlier this year, the earnings story is becoming less concentrated and it is becoming more widespread across the market.
That broader participation helped reinforce investor confidence and provided an important foundation for equity markets during the month. Reflecting this strength. Analysts increase their expectations for global corporate profits, with the 2026 estimate for earnings per share growth rising to a staggering 34% year over year. If that sounds high, it is. Our third theme for August is interest rates and bond markets.
I know this is often the least interesting topic, but it is one of the most important because interest rates influence everything from borrowing costs to stock market valuations as well. At Jackson Hole, Federal Reserve Chair Kevin Warsh reinforced a hawkish message leading investors to push out expectations for future rate cuts and keeping upward pressure on those interest rates.
At the same time, and this is important, US Treasury Secretary Scott Bessent announced what many are calling a modern day version of Operation Twist. In simpler terms, the Treasury plans to increase its purchases of longer dated government bonds to try to help contain the rise in longer term interest rates. Why does that matter? Because while the US Federal Reserve controls short term rates, long term rates are determined by investors, and recently, investors have been demanding higher rates to lend money to the US government.
The Treasury's announcement is an acknowledgment that rising long term interest rates are increasingly becoming a concern. At the tail end of the month, we received another important data point in the US. Employers added 162,000 jobs in August, and this was well ahead of expectations, and the unemployment rate remained steady at 4.1%. In Canada, much worse employment declined by 42,000 jobs.
However, the unemployment rate managed to hold steady at 6.4%. The message from the bond market remains clear economic growth is proving more resilient than expected, and the Federal Reserve, believe it or not, is losing control of longer term interest rates. Against that backdrop, Matco portfolios have continued to deliver solid results in 2026. Year to date, our global equity fund has returned 14.4%.
Our Canadian Equity Income fund is up 13.8%. The Matco balance fund has gained 8.2%. Our Opportunities Fund has delivered 8.4%, while the Diversified Income Fund has returned a more modest positive 1.0%, despite the challenging environment for fixed income amid rising interest rates. We're also pleased that several of these funds continue to rank in the top half of their peer groups, highlighted by our Diversified Income fund, which currently sits in 11th percentile within its category year to date.
As always, our focus remains on looking beyond the headlines, focusing on discipline, portfolio construction and investing in high quality businesses while creating long term value for our investors. Last month, we did an interview with James on the Global Equity Fund, and very shortly we're going to be doing another interview with Anil Tahiliani who is lead portfolio manager of our Matco Opportunities Fund.
Some of you are going to be familiar with the fund, but it's also potentially a re-introduction to the fund. For those of you who might be a little bit less familiar with the mandate itself. And for those of you who have been thinking about it or wondering, I started off this segment by including a book review of a recent book that I have read throughout the month.
It's been a busy summer with work, a little bit of travel, just all the things life related, so I haven't had as much of a chance to get through some of my reads. I am midway through my most recent one. I'm hoping to wrap it up by the end of the next month, and then we'll include a book review.
It's a very good read so far. It really covers a lot of the geopolitical topics that the world is facing right now, and it's probably the most relevant read. If anybody is interested in understanding what's going on between nations around the world this year.
