Canada’s S&P/TSX Composite Index is expected to decline by 1% to 36,600 by the end of 2026 before rebounding to a record 40,000 in 2027, according to updated forecasts.
The latest projections, which mark an upward revision from a prior estimate of 35,300, reflect a tempered near-term outlook despite the index’s recent surge. The gauge reached an all-time high this week, pushing its year-to-date gain to roughly 16%.
Financials, the largest sector on the TSX at 34% weighting, have led gains with a nearly 20% advance in 2024, supported by elevated valuations. Canada’s five largest banks now trade at an average of 15 times forward earnings, the highest since 2010. The energy sector has surged 45% year-to-date, driven by higher oil prices, while materials, including metal miners, have climbed 26% amid firm gold prices.
The revised outlook follows Tuesday’s announcement that Canada will impose retaliatory tariffs on $19.9 billion worth of U.S. goods, matching new duties imposed by Washington. Ottawa also pledged financial support for businesses and workers affected by the escalating trade dispute, adding uncertainty to the macroeconomic backdrop.
Analysts tracking the index suggest the near-term dip reflects a pause after the recent rally, with the 2027 target signaling a prolonged recovery phase driven by broader market resilience and sector-specific tailwinds.
