Updated: December 8, 2025 – mid‑morning ET
Canada’s stock market is catching its breath near record territory. The S&P/TSX Composite Index is trading just under 31,300, down only a fraction on the day and still close to its all‑time high around 31,542 set last week. [1]
With a pivotal Bank of Canada (BoC) rate decision due on Wednesday and a U.S. Federal Reserve cut widely expected this week, investors are in classic “wait‑and‑see” mode rather than rushing to take big new positions. [2]
Canada stock market snapshot – December 8, 2025
As of around 10:00 a.m. ET on Monday, December 8:
- S&P/TSX Composite: ~31,293, down about 0.06% on the day.
- Day’s range: roughly 31,272 – 31,332.
- 52‑week range: 22,228 – 31,542, putting the index within a few hundred points of its record high. [3]
The current level caps a remarkable run. Over the last year, the TSX has delivered roughly 25% total return, firmly placing Canadian equities among the better performers in the developed world. [4]
RBC Wealth Management calculates that by late November the S&P/TSX had gained about 24.9% year‑to‑date, driven mainly by the materials and financials sectors. [5] National Bank Investments similarly notes that Canada and emerging markets have been “leading the charge” in 2025 when you look at global equity performance. [6]
What’s moving the TSX today
1. Central banks in the spotlight
Today’s muted trading is all about central‑bank watching:
- Bank of Canada (Dec. 10 meeting)
- The BoC’s policy rate is currently 2.25%, following four quarter‑point cuts over 2025, including back‑to‑back reductions in September and October. [7]
- A Reuters poll of 33 economists expects the bank to hold the rate at 2.25% on December 10, and a majority see no further cuts at least until 2027. [8]
- That poll also highlights that inflation is now comfortably within the BoC’s target range, while the economy grew at an annualized 2.6% last quarter, easing the urgency for more stimulus. [9]
- U.S. Federal Reserve
- Markets are pricing in a quarter‑point Fed cut this week, but uncertainty about the whole 2026 U.S. rate path is keeping global risk appetite somewhat cautious. [10]
Traders are essentially sitting on their hands, waiting to see whether the BoC simply confirms the market’s “on hold for a long time” view, or hints at a quicker path toward eventual hikes.
2. Sector tug‑of‑war: Energy vs Tech
Intraday, the index is being pushed and pulled by familiar sector drivers: [11]
- Energy is acting as a drag. Shares of Enbridge, Imperial Oil and Cenovus are all down around 1% as crude prices slip more than 1%.
- Technology is doing the heavy lifting. Shopify, Constellation Software and Celestica are up roughly 1–2.5%, helping to offset resource‑sector weakness.
- Materials are softer, continuing Friday’s pullback when the group fell about 1.1%, partly due to a double‑digit slide in Orla Mining after a major shareholder sold stock. [12]
This split encapsulates the 2025 story: Canada’s heavy commodities and banks exposure is still the backbone of the rally, but tech and AI‑linked names have become increasingly important in sustaining momentum.
3. Strong jobs data and a firmer Canadian dollar
Friday’s jobs report gave bulls new ammunition: Canada added around 53,600 jobs in November, the third straight month of robust gains, pushing the unemployment rate down to a 16‑month low and beating forecasts that had called for job losses. [13]
The Canadian dollar responded by climbing to roughly a 10‑week high against the U.S. dollar, as traders reinforced bets that the BoC is done cutting. [14]
For equities, strong labour data is a double‑edged sword:
- It supports earnings for domestically focused sectors like banks and consumer names.
- But it also reduces the odds of fresh rate cuts, which could limit multiple expansion in more rate‑sensitive growth stocks.
2025 performance: Canada quietly outpacing many peers
A near‑25% year for the TSX
RBC Wealth Management’s Global Insight 2026 Outlook: Canada points out that the S&P/TSX is on track for one of the strongest returns among developed equity markets in 2025, despite a backdrop of trade tensions and modest domestic growth. [15]
Key drivers they highlight:
- Record gold prices – Gold prices have surged to new highs (some Canadian strategists even talk about scenarios with gold around US$4,000), boosting miners and precious‑metals producers that sit in the TSX materials bucket. [16]
- Domestic lenders – Canada’s big banks have surprised to the upside in 2025, with all six major lenders beating expectations for their fiscal year and several reporting double‑digit stock gains. [17]
- Sector mix – The TSX’s heavy tilt toward financials, energy and materials has been an asset in a world of higher real assets prices and rising fiscal spending. RBC calculates that materials and financials together account for roughly two‑thirds of the index’s 2025 total return contribution so far. [18]
National Bank Investments, in its “Outlook 2026: How long can it spin?” asset‑allocation piece, notes that Canada and emerging markets are leading global equity performance this year and that global equities have posted “above‑average” gains for a third consecutive year. [19]
ETF flows confirm the trend
The rally isn’t just visible in the index: Morningstar reports that the iShares Core S&P/TSX Capped Composite Index ETF (XIC) was among the top‑performing Canadian stock ETFs in November, while Canadian ETFs tracking the U.S. S&P 500 actually lagged over that period. [20]
That performance gap has encouraged some portfolio strategists to rebalance toward domestic equities after years of U.S. dominance.
Inside the market: sectors to watch
1. Banks: earnings beats but valuations less forgiving
Reuters reports that TD Bank, Bank of Montreal and CIBC all beat fourth‑quarter profit expectations, buoyed by stronger capital‑markets activity and trading revenues. All six of Canada’s big banks finished fiscal 2025 ahead of analyst forecasts. [21]
- Bank executives say the economy remains resilient, and BMO specifically expects capital markets and wealth‑management businesses to stay strong into 2026. [22]
- At the same time, some institutional investors caution that bank stocks are now fully valued, and that credit losses could remain elevated for longer – not the ideal backdrop for another straight‑line rally. [23]
Given that financials represent more than a quarter of the S&P/TSX Composite, how the bank group trades into and after the BoC decision will be critical for the broader index.
2. Materials and gold: from hero to potential source of volatility
RBC’s attribution work shows that materials – especially gold producers – have been a top contributor to the TSX’s roughly 25% YTD gain. [24]
But there are signs of short‑term fatigue:
- On Friday, the materials group fell about 1.1%, dragged down by single‑stock news in Orla Mining after a major shareholder sale. [25]
- Some analysts warn that if the global 2026 rate outlook proves more hawkish than markets currently expect, gold could face a technical break lower, which would feed into TSX volatility. [26]
Still, many institutional outlooks – including those from Mackenzie and Canada Life – see commodities as a strategic diversifier, supported by ongoing infrastructure, electrification and data‑centre investment that keeps demand for copper, uranium and other industrial metals robust. [27]
3. Energy: squeezed by oil but backed by fiscal and infrastructure themes
Energy stocks have been choppy:
- Today, the sector is under pressure as oil prices trade more than 1% lower, weighing on majors like Enbridge, Imperial Oil and Cenovus. [28]
- Over 2025, however, energy still shows a positive contribution to TSX returns, according to RBC’s 2025 sector breakdown. [29]
Longer‑term, Canadian producers stand to benefit from:
- Growing North American energy security themes;
- Large‑scale infrastructure and defence spending outlined in the 2025 federal budget, which is pumping approximately C$280 billion over five years into infrastructure, productivity, housing and security. [30]
4. Technology and AI: smaller weight, outsized narrative
Tech remains a relatively small slice of the TSX, but it punches above its weight in terms of narrative:
- Big names like Shopify, Celestica, OpenText and CGI have all ridden the global AI and automation boom. [31]
- IG Wealth Management’s 2026 outlook highlights an ongoing “AI supercycle” in capital spending as one of four pillars supporting global growth, alongside monetary easing, fiscal expansion and the wealth effect from strong asset prices. [32]
For the Canadian market, these companies provide a growth counterweight to the more value‑oriented financial and resource sectors.
Bank of Canada backdrop: low but steady rates
From a macro perspective, the policy environment is central to the Canadian equity story:
- The BoC has delivered 275 basis points of cuts since its 2023–24 peak, taking the overnight rate down to 2.25%, which RBC notes is at the lower end of its estimated “neutral” range. [33]
- RBC’s Canada outlook emphasises that the central bank appears “likely finished easing” unless growth or employment deteriorate markedly. [34]
- The yield curve has steepened: short‑term yields moved lower with BoC cuts, while longer‑term Government of Canada yields have pushed higher, partly due to concern over wider federal deficits. [35]
The result is a backdrop that many strategists view as broadly supportive but no longer aggressively stimulative:
- National Bank’s CIO office keeps a favourable stance toward equities, citing four conditions that still hold: more accommodative central banks, resilient global growth, healthy earnings and positive momentum. [36]
- Mackenzie expects only modest additional BoC easing, with a slightly steeper yield curve but relatively stable bond yields overall. [37]
2026 forecasts: what major strategists are saying about Canadian stocks
Most of the big Canadian houses are constructive but cautious on the outlook for 2026.
RBC Wealth Management: quality bias and moderate expectations
In its Global Insight 2026 Outlook: Canada, RBC argues that: [38]
- The 2025 federal budget, with its large‑scale infrastructure and housing program, should be a tailwind for the TSX, particularly for financials, industrials and materials.
- The S&P/TSX currently trades at around 15.9x earnings, above its long‑run average of 14.7x but still far below the U.S. market’s premium multiples. That leaves some cushion if global equities see a broad pullback, but it also raises the bar for delivering earnings growth.
- They recommend a focus on “quality” companies – those with strong balance sheets, durable and growing earnings, and proven management teams – rather than betting on multiple expansion alone.
National Bank Investments: Canada and EM still overweight
National Bank’s 2026 asset‑allocation strategy takes a slightly more bullish tone on risk assets: [39]
- The firm maintains a favourable stance on equities overall, pointing to a macro environment that still checks all the boxes of its “pro‑equity” indicator (accommodative central banks, broad growth, positive earnings and relative momentum vs bonds).
- Within equities, its geographic momentum model remains overweight Canada and emerging markets, even as it modestly increases U.S. exposure at the expense of EAFE (Europe, Australasia and Far East).
- A brief equity “scare” in November is seen as having reset sentiment and possibly laid the groundwork for a positive finish to 2025 and start to 2026, with their sentiment indicator well below euphoric extremes.
IG Wealth Management: fundamentals over headlines
IG’s “2026 Market Outlook: Beyond the headlines, fundamentals take the wheel” frames 2026 as a period of renewal rather than retreat: [40]
- It highlights four pillars for the next phase of the cycle:
- Monetary easing – continued rate cuts from the BoC and Fed, albeit at a slower pace;
- Fiscal expansion – including Canada’s focus on housing and productivity investments;
- The AI supercycle – ongoing tech‑driven productivity and capex;
- The wealth effect – stronger household balance sheets and rising markets supporting consumption.
- IG argues that as recession fears fade and growth re‑accelerates, markets will increasingly reward discipline, diversification and a long‑term view, favouring quality across sectors and regions – including Canada.
Mackenzie Investments: resilience amid stretched valuations
Mackenzie’s 2026 Market Outlook stresses that while valuations and risk premiums look stretched in some areas, equities remain attractive for long‑term investors: [41]
- They expect fewer rate cuts than markets have priced in, but still see modest BoC easing and stable bond yields.
- The firm remains constructive on equities thanks to fiscal stimulus, dovish central banks, a global capex cycle and AI‑driven productivity gains.
- They also highlight commodities – including gold, copper, uranium and other inputs to electrification and data‑centre build‑outs – as key strategic diversifiers in multi‑asset portfolios.
Across these outlooks, a common message emerges: Canada’s equity market enters 2026 from a position of strength, but investors should temper return expectations and pay close attention to earnings quality and policy risk.
Key risks for Canadian stocks in 2026
Even as forecasts skew positive, strategists stress several downside risks that could derail the TSX:
- Trade and tariff uncertainty
- New U.S. tariff measures have already introduced volatility in 2025; RBC and Mackenzie both flag ongoing trade tensions and USMCA review risk as important overhangs for export‑oriented sectors like metals and lumber. [42]
- Valuations and narrow leadership
- National Bank notes that all four major global equity regions now trade in the top quartile of their 10‑year valuation ranges, making earnings growth rather than multiple expansion the likely driver of future returns. [43]
- Rate‑hike risk later in the decade
- A majority of economists expect the BoC to keep rates unchanged through at least 2027, but any resurgence in inflation or overheating in housing could bring earlier‑than‑expected hikes, pressuring rate‑sensitive segments such as real estate and utilities. [44]
- Commodity volatility
- While many houses see commodities as structural winners, prices for gold and energy remain highly sensitive to shifts in real yields, global growth and geopolitics. A sharp reversal would ripple through the TSX’s heavyweight resource names. [45]
What this means for investors watching the Canada stock market now
From a high‑level perspective, the Canada stock market as of December 8, 2025 looks like this:
- The S&P/TSX Composite is near record highs, with about 25% gains over the past year. [46]
- The Bank of Canada is widely expected to hold its 2.25% policy rate this week and remain on the sidelines for an extended period, creating a low‑but‑stable rate environment. [47]
- Strategists from RBC, National Bank, IG Wealth Management and Mackenzie generally agree that equities – including Canadian stocks – remain attractive, but they emphasise quality, diversification and realistic return expectations as we head into 2026. [48]
For now, traders are focused on the next BoC and Fed decisions. Barring a major surprise, the base case is for the TSX to continue trading in a tight range near its highs, with sector rotations – between banks, resources and tech – doing most of the work under the surface.
Important: This article is for informational and journalistic purposes only and does not constitute investment advice, recommendations, or an offer to buy or sell any security. Always do your own research or consult a licensed financial advisor before making investment decisions.
References
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