TORONTO – Canada’s main stock index slipped on Monday, December 8, 2025, as investors locked in profits near record highs and shifted their focus to this week’s interest‑rate decisions from the Bank of Canada and the U.S. Federal Reserve.
The S&P/TSX Composite Index closed at 31,197.33, down 0.36% on the day, after trading in a narrow range between roughly 31,170 and 31,330 on volume of about 129 million shares. [1] The benchmark remains just shy of Friday’s record area around 31,500, capping what is still one of the strongest years for Canadian equities among developed markets. [2]
TSX after the bell: modest pullback from record territory
Based on end‑of‑day data, Monday’s decline leaves the index about 0.36% lower than Friday’s close of 31,311.41, which itself followed a choppy week that ended slightly in the red after a run to fresh records. [3]
Intraday, the TSX spent much of the session “swinging between gains and losses” around the 31,300 level, with traders reluctant to make big bets before central‑bank headlines later in the week. [4]
U.S. markets painted a similar “risk‑off but not panicked” picture. Late in the North American session, major U.S. benchmarks were also modestly lower, with the Dow, S&P 500 and Nasdaq all down roughly 0.4–0.6%, according to real‑time index data. [5]
Despite Monday’s dip, 12‑month performance for the TSX remains robust: recent figures show the index up more than 20% year‑over‑year, and some strategists note Canadian equities are on pace to deliver one of the best returns among developed markets in 2025. [6]
Sector snapshot: energy, utilities and telecom weigh; tech and industrials cushion the fall
Defensive and energy names under pressure
By late morning, The Canadian Press reported that the TSX was down about 44 points at 31,267.89, with losses concentrated in telecom, utilities and energy, while U.S. markets also traded lower. [7]
Intraday commentary from Trading Economics and other market data sources showed: [8]
- Energy led the decline, with
- Enbridge down more than 1%,
- Imperial Oil and Cenovus Energy off around 1%,
as crude oil prices slipped more than 1% on the day.
- Large miners were also weaker, adding pressure to the materials complex.
These moves echoed broader global caution: oil prices drifted lower and gold eased, dragging on a TSX that remains heavily tilted toward resource and income‑oriented names. [9]
Technology and industrials remain bright spots
Offsetting some of that weakness, technology and industrials once again provided a partial cushion:
- Reuters reported that technology stocks rose about 0.8%, with Celestica up roughly 4.8% and BlackBerrygaining around 1.3%. [10]
- Industrials also contributed, helped by a roughly 1% advance in Bombardier. [11]
- Trading Economics highlighted strength in Shopify and Constellation Software, each up around 1–1.5%, adding support to the broader growth complex. [12]
That pattern — cyclical tech and industrials holding up while old‑economy resource stocks consolidate — has been a recurring theme in 2025, particularly on days when commodities take a breather. TechStock²+1
Corporate headlines moving individual TSX names
Several stock‑specific stories also shaped sentiment:
- Maple Leaf Foods (TSX:MFI) announced a special cash dividend of $0.60 per share, payable December 19 to shareholders of record as of December 15, on top of its regular quarterly payout. Management framed the move as a signal of balance‑sheet strength and confidence in the outlook, following the earlier spinoff of its pork business. [13]
- Transcontinental (TSX:TCL.A/TCL.B) surged after agreeing to sell its packaging division to ProAmpac Holdings in a deal worth roughly C$2.22 billion, including debt. Reuters noted that the company plans to return a substantial portion of the proceeds to shareholders, making the stock one of Monday’s standout gainers on the TSX. [14]
- Lithium Americas (TSX:LAC) is set to join the S&P/TSX Composite Index later this month following a quarterly rebalancing by S&P Dow Jones Indices, a move that typically boosts liquidity and can attract additional institutional flows. [15]
- Junior‑market sentiment was softer: the S&P/TSX Venture Composite Index fell about 1.5% to around 925, extending last week’s declines and underscoring how risk appetite remains more cautious in small‑cap Canada compared with the blue‑chip benchmark. [16]
Central banks in focus: Bank of Canada and Fed set the tone
Bank of Canada: policy rate at 2.25%, widely expected to hold
Monetary policy remains the dominant macro driver for Canadian assets this week.
- The Bank of Canada cut its policy rate to 2.25% at the October 29 meeting, after a series of reductions from the 5% peak seen in 2024. [17]
- The central bank’s next decision comes on Wednesday, December 10, with a press release scheduled for 9:45 a.m. ET. [18]
A Reuters poll released on December 5 found that all economists surveyed expect the BoC to hold the overnight rate unchanged, and most think further cuts are unlikely before at least 2027. [19]
Other forecasters broadly agree:
- RBC Economics’ weekly preview for the week of December 8 expects the BoC to leave rates unchanged after its cuts in September and October. [20]
- The C.D. Howe Institute’s Monetary Policy Council recently recommended keeping the overnight rate at 2.25%over the coming year. [21]
- Retail‑focused outlooks, such as wowa.ca’s rate forecast, similarly point to broad stability through 2026, albeit with significant uncertainty around trade and inflation. [22]
A Global News explainer published Monday underscores why markets see another cut this week as unlikely: strong recent jobs data has eased recession fears, but inflation remains sticky enough that policymakers are wary of re‑accelerating price pressures. [23]
For the TSX, a steady BoC rate path tends to:
- Support banks and domestic cyclicals, which benefit from clearer visibility on margins and credit quality.
- Limit upside for rate‑sensitive growth names if investors begin to price in a more restrictive long‑term policy stance than earlier in the year. [24]
U.S. Federal Reserve: expected cut, but 2026 path still murky
On the U.S. side, traders are watching the Federal Reserve’s December meeting just as closely:
- A Reuters piece on Monday noted that firms such as Nomura now expect a 25‑basis‑point Fed cut this week, with futures markets pricing an ~87% probability of that move. [25]
- Strategists anticipate further easing in 2026, but the exact path is contested, and expectations could shift rapidly if U.S. growth or inflation surprises either way. [26]
For Canadian assets, a Fed that is easing more aggressively than the BoC could:
- Weigh on the U.S. dollar relative to the loonie, particularly if Canadian data stay firm. [27]
- Support commodities and gold, historically constructive for the TSX’s heavyweight resource names.
- Keep global equity risk‑taking alive, though with occasional bouts of volatility as markets reassess the 2026 policy landscape. [28]
Housing, banks and credit: what Fitch and others are worrying about for 2026
Interest‑rate expectations intersect directly with another key driver for Canadian markets: housing and household leverage.
A new Fitch Ratings “Global Housing and Mortgage Outlook 2026” report, released Monday, argues that: [29]
- Global home prices are likely to rise modestly in 2026, supported by persistent supply shortages in markets including Canada, despite slowing growth.
- Performance risks are building, as slower income growth and elevated uncertainty begin to push mortgage arrears higher in a number of countries, including Canada, the U.S., Mexico and Japan.
The report specifically highlights structural supply constraints — high land, labour and materials costs, plus regulatory bottlenecks — as a key reason why prices can stay firm even in the face of higher debt‑service burdens. That combination is a double‑edged sword for the TSX:
- On one hand, resilient home prices support household balance sheets, consumer spending and bank collateral values.
- On the other, any uptick in arrears or unemployment would be felt quickly by Canadian lenders, which occupy a large share of the benchmark index. [30]
Separately, Fitch has warned that Canadian banks face a “deteriorating” medium‑term outlook amid a weak global backdrop and trade tensions, reinforcing the idea that 2026 could be more challenging for credit growth even if policy rates stay put. [31]
How strategists see the TSX into 2026
While Monday’s move was small, it comes against a backdrop of increasingly detailed 2026 outlooks from banks and asset managers.
Valuations, returns and sector leadership
- A recent RBC Wealth Management “Global Insight 2026 Outlook: Canada” note describes the S&P/TSX Composite as on pace to deliver one of the stronger 2025 returns among developed‑market equity benchmarks. The bank attributes much of that outperformance to record gold prices, solid bank earnings and an improved outlook for domestic lenders. [32]
- At the same time, strategists stress that the TSX still trades at a valuation discount to U.S. equities, leaving some room for further multiple expansion if earnings hold up and trade tensions do not flare significantly. TechStock²+1
- Asset‑allocation research from National Bank Investments and others generally recommends maintaining meaningful exposure to Canadian equities within diversified portfolios, while acknowledging that 2026 upside is likely to be more modest than 2025’s rally. [33]
Rate and yield‑curve views
Franklin Templeton’s latest Global Investment Management Survey — summarized in an Advisor.ca piece — points to: [34]
- Expectations for several additional Fed rate cuts and a steepening global yield curve through 2026.
- A constructive view on equities, including Canada, with particular enthusiasm for energy and infrastructure, and for companies that use AI effectively rather than just selling it.
- An outlook that the Bank of Canada may only have one or two more cuts left in the next year, if any, reinforcing the “higher for longer” messaging markets are already digesting.
For TSX investors, a steeper curve and stable BoC rate generally favour:
- Banks and insurers, which benefit from wider net interest margins.
- Infrastructure and pipeline operators, often seen as yield plays tied to long‑term projects.
- Select value‑oriented cyclicals that can ride a slow but positive global growth backdrop.
2026 TSX performance expectations
Forward‑looking equity commentary remains cautiously optimistic:
- A Reuters poll from August projected the TSX would gain about 2.3% by the end of 2025 and climb toward 30,000by end‑2026. In reality, the index has already moved well past that 30,000 mark this year, highlighting how conservative some earlier forecasts were. [35]
- Recent opinion pieces aimed at retail investors argue that 2026 could still be a “big year” for Canadian stocks, citing relatively attractive valuations, high dividend yields and improving industrial and tech participation in the index. [36]
The overarching message: the easy, catch‑up gains from post‑pandemic repricing and rate‑cut anticipation may be behind us, but strategists still see room for mid‑single‑digit returns from Canadian equities over the next year, assuming no major macro shock. [37]
What Monday’s trading signals for the rest of the week
With the TSX still hovering near all‑time highs and volatility relatively subdued, Monday’s pullback looks more like position‑squaring ahead of major central‑bank meetings than the start of a deeper correction.
Key themes to watch over the coming days:
- Central‑bank messaging
- Any surprise from the Bank of Canada — either in the rate decision or in guidance about 2026 — could quickly ripple through banks, rate‑sensitive tech names and rate‑linked sectors like real estate. [38]
- The Fed’s tone on growth, inflation and future cuts will shape global risk appetite, commodity demand and cross‑border capital flows into Canada. [39]
- Energy, gold and the resource complex
- With oil and gold both coming off recent highs, resource stocks remain a swing factor. Sustained weakness in crude or precious metals would pose a headwind to the TSX’s resource‑heavy makeup. [40]
- Bank and housing sentiment
- Fitch’s warning about rising arrears risk and a slowing housing backdrop in 2026 adds a note of caution for financials, even as current data remain relatively healthy. [41]
- Index changes and corporate actions
- The upcoming inclusion of Lithium Americas in the TSX Composite, plus moves such as Maple Leaf Foods’ special dividend and Transcontinental’s asset sale, underline how corporate actions and index rebalancings can drive stock‑specific volatility even when the broader market is quiet. [42]
For now, Monday’s “after the bell” picture for Canada’s stock market is one of orderly consolidation: the TSX is modestly lower, but still near record territory, with investors squarely focused on how central bankers in Ottawa and Washington will set the tone for 2026.
References
1. www.investing.com, 2. tradingeconomics.com, 3. www.investing.com, 4. www.tradingview.com, 5. www.investing.com, 6. www.investing.com, 7. ca.finance.yahoo.com, 8. www.tradingview.com, 9. ca.finance.yahoo.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.tradingview.com, 13. halifax.citynews.ca, 14. www.reuters.com, 15. www.newswire.ca, 16. www.investing.com, 17. www.bankofcanada.ca, 18. www.bankofcanada.ca, 19. www.reuters.com, 20. www.rbc.com, 21. cdhowe.org, 22. wowa.ca, 23. globalnews.ca, 24. www.reuters.com, 25. www.reuters.com, 26. www.reuters.com, 27. ca.finance.yahoo.com, 28. www.advisor.ca, 29. www.tradingview.com, 30. www.tradingview.com, 31. www.investmentexecutive.com, 32. us.rbcwealthmanagement.com, 33. www.nbinvestments.ca, 34. www.advisor.ca, 35. www.reuters.com, 36. ca.finance.yahoo.com, 37. www.advisor.ca, 38. www.bankofcanada.ca, 39. www.reuters.com, 40. ca.finance.yahoo.com, 41. www.tradingview.com, 42. halifax.citynews.ca
