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The gains in global equity markets come down to two main factors: a rebound from the “overly negative move” in the fourth quarter and an increasingly dovish tilt from many of the world’s biggest central banks, Doug Porter, chief economist at Bank of Montreal, said in a note to clients.

Cannabis stocks led the first-quarter gains, making up six of the benchmark’s 10 best performers. However, strategists argue that rate-sensitive sectors like banks, real estate, utilities and telecommunications are the safest bets going forward after U.S. and Canadian yield curves inverted, potentially signalling an impending recession.

Dvai Ghose, former global head of equity research at Canaccord Genuity Group Inc., expects the Canadian market to soften over the next 12 to 18 months as it gets “caught up by slower economic growth from the U.S.,” even though the fundamentals aren’t too bad, he said.

“I don’t think valuations are that stretched, I don’t think macro’s that bad, I’m just saying I think we’ll probably have a couple quarters of recession next year and you’ll see 10, 15 per cent pullbacks,” Ghose, who retired on March 29, said in an interview at Bloomberg’s Toronto office.

Kshatriya is particularly focused on the Canadian business cycle, which “has clearly decelerated over the course of the last 12 months or so” based on trade and consumption data, while earnings revisions have been “deeply negative.”

“It’s not unprecedented but it is unusual that you have such sharp negative revisions at a time when the equity markets are pushing higher,” he said. “That would argue for a bit of a pause.”