Despite that, many analysts believe the TSX has a solid foundation underpinning its consistent growth.
Rising corporate profits and earnings across the board as well as lower interest rates from the Bank of Canada will “help drive the equity market toward a new record,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.
The TSX is projected to have growth supported by strong commodity prices, especially in the energy and materials sectors, which are set to rebound in 2025, she said.
The federal government recently increased its investments in Canadian infrastructure in an effort to increase the number of homes in the coming years, which could help to revive the materials sector on the index.
A weaker Canadian dollar could also work in favour of the equities market, attracting more foreign investment to Canada, Gardner said.
The Canadian financial sector has maintained a solid performance and is expected to get a moderate boost from upcoming mortgage renewals, setting the sector up for further profitability, she said.
Further interest rate cuts, although slimmer than those seen in 2024, will also push the equity market up, Gardner said, “which is why we do expect more upside from here.”
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TSX is expected to underperform S&P 500
Kourkafas said a resilient consumer, softening inflation levels and rising wages are also working in favour of the Canadian index—increasing consumer and business confidence.
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