Toronto, January 7, 2026, 05:52 EST — Market closed
Canada’s benchmark stock index closed at a record high on Tuesday, putting the Toronto market ahead of where many strategists expected it to finish 2026. The S&P/TSX Composite ended up 0.6% at 32,407.02, led by a 3.1% jump in materials as gold rose, while energy slipped with oil settling 2% lower. Wall Street also ended higher and the Dow closed at a record, and “you are seeing a strong start to the year on both sides of the border,” said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth. Reuters
The Canada stock market forecast for 2026 is coming into sharper focus because the TSX leans heavily on banks and resource producers, tying performance to the rate cycle and commodities. A rally driven by gold can lift the whole index, but it can also fade fast if the macro backdrop turns.
A Reuters poll of 20 equity strategists and portfolio managers in November put the median end-2026 target for the TSX at 32,125 — a level the index has already exceeded. Philip Petursson, chief investment strategist at IG Wealth Management, said central banks were shifting toward “accommodation,” with more rate cuts expected in Canada and the United States. Angelo Kourkafas, senior global investment strategist at Edward Jones, said valuations had already “re-rated” higher and flagged the risk of slower returns and higher volatility in 2026. Reuters
The index’s early pop has been broad enough to pull in large-cap tech and banks, but commodities have set the pace. On Monday, the TSX gained 1.1% to 32,219.95 as financials climbed 1.6% and materials rose 3.3% with gold up 2.7%. Shopify jumped nearly 6% and Canadian Natural Resources slid 6% as the energy sector fell 3.6%, and Barry Schwartz, chief investment officer at Baskin Wealth Management, called banks “unstoppable.” Reuters
Gold remains a swing factor for a mining-heavy market in 2026, and some forecasts have raised the stakes. Morgan Stanley forecast bullion at $4,800 an ounce by the fourth quarter of 2026, citing falling rates and buying by central banks and funds; gold ended 2025 up 64%, its best annual performance since 1979, Reuters reported. A bid for metals supports TSX miners, but it also leaves the index exposed if the rally cools.
Canada’s domestic data have started the year on a softer note. S&P Global’s Canada services purchasing managers’ index — a survey that tracks business activity — rose to 46.5 in December from 44.3 in November but stayed below 50, the line that separates growth from contraction. Paul Smith, economics director at S&P Global Market Intelligence, said tariffs and trade policies were weighing on confidence and activity.
The Bank of Canada has cut its benchmark overnight rate to 2.25%, and it next sets policy on Jan. 28, alongside a quarterly Monetary Policy Report. The schedule matters for rate-sensitive areas such as housing-linked lenders, utilities and consumer names, and it also shapes the Canadian dollar and earnings for exporters.
From a technical view, traders are watching whether the TSX can hold above the 32,000 level after this week’s breakout. A slip below that round number would put the focus back on profit-taking in the miners and banks that drove the advance, while bulls will look for a push toward 32,500.
But the same commodity tilt that helped lift the index can work in reverse if safe-haven demand fades and metals retreat. Energy also remains a fault line, with investors watching whether changes in Venezuela’s oil output and export flows pressure North American heavy crude pricing. Any upside surprise in inflation would also test rate-cut expectations that have supported equity multiples.
The next immediate catalyst is Friday’s labour data: Statistics Canada’s release schedule lists the Labour Force Survey for December 2025 on Jan. 9, and the U.S. Employment Situation for December 2025 is also due on Jan. 9 at 8:30 a.m. ET. Traders will watch wages and unemployment closely for signals on how fast rates can fall — and whether the early 2026 TSX rally has room to run.
