The Toronto Stock Exchange Broadcast Centre is shown in Toronto on Friday June 28, 2013.(THE CANADIAN PRESS/Aaron Vincent Elkaim) · The Canadian Press
Canadian stocks are on course for new all-time highs, say analysts, calling for the S&P/TSX Composite Index (^GSPTSE) to continue shrugging off a weak economy and a trade war with the United States.
Canada’s main stock index topped 30,000 points for the first time on Tuesday. The index has gained over 20 per cent year-to-date, handily outpacing the S&P 500. (^GSPC).
BMO chief investment strategist Brian Belski recently increased his year-end target to 31,500 from 28,500, leaning into his previous bullish calls on Canadian stocks.
“The stock market recovery that no one believed, was widely panned and even more loudly doubted when we first published our view that Canada was entering a prolonged period of outperformance relative to the U.S. way back in mid-2024, has reached heights that even we thought were lofty,” Belski wrote in a note to clients.
“We now expect the TSX to outperform the S&P 500 in local currency by over eight per cent on an annual basis this year, marking one of the strongest outperformances since 1990,” Belski added. “In fact, only in 1993, 1999, and 2005 were years when the TSX was up double digits and outperformed the S&P 500 by over eight per cent.”
Brendan Caldwell, president and CEO of Toronto-based Caldwell Investment Management, says mining stocks, particularly those related to gold, have been strong performers in 2025, alongside the financial sector, another giant component of the TSX.
He says Belski’s year-end target is “easily doable.”
“If they’re cutting rates here and south of the border, the money is not really going to go into the Main Street economy as much as it will go into financial assets,” Caldwell told Yahoo Finance Canada. “Cheap money makes markets go up.”
The Bank of Canada delivered a 25 basis point rate cut last month with little forward guidance. Many economists expect another 25 basis point cut in October. The Federal Reserve also eased borrowing costs last month, its first move in 2025.
Despite this year’s run-up, Scotiabank strategist Hugo Ste-Marie says TSX stocks remain attractively valued.
“Although the TSX is not as cheap as it used [to be], we believe valuation still has room to expand,” he wrote in a research note on Monday.
“We believe further BoC and Fed easing will provide additional support to valuation metrics.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist.
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