Canada's TSX index is projected to reach a new record high

Canada issues alert

Canada's S&P/TSX Composite Index (.GSPTSE) continued its strong upward momentum into 2026, closing at a new record high of 33,970.38 on February 24 — up 0.57% on the day and marking several all-time highs in recent sessions.

This index has risen by approximately 7.1% year-to-date , outperforming many other global indices amid a clear sector shift from large-cap and technology growth to traditional, commodity-related, and cyclical sectors of the "old economy".

A Reuters survey of 23 stock market strategists and portfolio managers (conducted from February 13-23) forecasts the TSX to rise another 5.6% to a year-end average target of 35,650 — surpassing recent records and significantly higher than the 32,125 forecast in the previous November survey.

In the long term, experts predict the index will reach 36,000 points by mid-2027 (a 6.6% increase from the current level). This optimism stems from rising commodity prices, improved global growth signals, and the large weighting of the TSX index in value-oriented sectors, which benefit from ongoing investment shifts.

The outstanding performance of the "traditional economy"

The composition of the TSX index—primarily materials (mining/metals), energy, financial, and industrial—places it favorably within the current market environment. Analysts note that investors are shifting away from the growth of large-cap U.S. companies (especially AI/technology) toward sectors with stronger fundamentals, cash flow, profit margins, and exposure to strengthening industrial cycles. Key highlights from the Reuters survey and recent performance:

• Materials sector (including gold, silver, and copper mining companies): Up approximately 26% year-to-date, with plans to nearly double by 2025. Soaring prices of precious and base metals—driven by geopolitical tensions, supply chain security concerns, and industrial demand—have boosted mining stocks. This sector has been a major contributor to recent record closing levels, with rising gold and copper prices adding to the significant impact.

• Energy: Strong gains amid stable oil prices (driven by geopolitical risks and demand expectations). Energy stocks have outperformed, supporting the overall index's upward momentum.

• Finance & Industrial Sector: Expected to deliver solid earnings growth thanks to maintained capital discipline and an ongoing global economic recovery. Lower interest rates (expected to be cut) and stable consumer spending will further support these sectors.

• The broader context: The shift reflects a "value over growth" trend, with essential, industrial, energy, and materials sectors outperforming stagnant or lagging technology/media sectors by early 2026. Data from the TSX Venture Exchange reinforces this: Mining stocks dominate the TSX Venture 50 list for 2026, with 48 resource companies recording average stock price increases of 443% and a surge in market capitalization amid a predicted commodity hyper-growth cycle.

Angelo Kourkafas, senior global investment strategist at Edward Jones, summarized this momentum: " The TSX's tendency toward traditional 'old economy' sectors continues to benefit it as investors shift away from ongoing large-cap growth and toward sectors supported by improved growth expectations amid signs of a strengthening industrial cycle. "

Exchange rates and global capital flows

Foreign capital flows and currency stability also influence TSX performance. The relatively stable Canadian dollar reduces exchange rate risk for international investors, while global funds seeking diversification beyond their US technology focus may find Canada's mix of industries attractive.

If global asset managers continue to reallocate to commodity-driven markets, the TSX could benefit disproportionately.

Despite the optimism, risks remain. Commodity price volatility, declining global demand, housing market fragility, or tighter financial conditions could limit growth momentum. Additionally, a sharp correction in the US stock market could have ripple effects, putting pressure on the Canadian stock market.

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Compiled and analyzed by HCCVenture

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