There’s no question that 2025 has been an interesting year from an investing standpoint, especially with the TSX up over 20% so far year-to-date.
Despite considerable uncertainty in the economy recently, particularly at the start of the year, the TSX has continued to climb higher.
Not only have there been concerns about persistent inflation, but while interest rates have been declining, they are still impacting certain stocks. In addition, though, the fears and uncertainty around a global trade war have slowly been fading.
At one point in April, the index was down 9% for the year, so the fact that it’s now up more than 20% year to date and 24% over the last 12 months is a noteworthy turnaround.
But while the overall index has done well, it’s a few key sectors driving most of that performance.
In a market as concentrated as the TSX, sector strength matters. And what investors need to remember is that the index is heavily weighted toward commodities, financials, and real assets, so the performance of just a few industries can make a significant impact on its performance.
So, let’s unpack why the TSX has had such a strong performance this year.
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Energy stocks have seen mixed performance, while materials stocks have soared
While many investors know Canada has an abundance of energy stocks, investors sometimes forget how many gold and other materials stocks trade on the TSX.
Throughout 2025, many of these stocks have been top performers on the TSX. The materials sector in particular has posted double-digit returns this year, fuelled by rising commodity prices and investor demand for inflation hedges.
For example, Barrick Mining, one of the largest gold producers in the world, is up more than 100% year to date. And Kinross Gold, a $43 billion materials stock, is up over 140%.
So, it’s clear that a significant portion of the TSX’s strong performance in 2025 has come from the materials sector.
Energy stocks, on the other hand, have been more of a mixed bag. Some stocks have outperformed the TSX, such as MEG Energy, which is up 27% year-to-date, while others like Suncor Energy have slightly lagged the TSX, up just over 11% year-to-date.
Bank stocks have helped power the TSX higher in 2025
Financials are another sector that makes up a large portion of the TSX, and although most of the banks have only slightly outperformed the TSX so far in 2025, they’ve powered much of the market’s stability this year.
In fact, besides Toronto-Dominion Bank, which is up a whopping 55% so far year-to-date, the other five Big Six Banks have all seen year-to-date returns between 20% and 30%.
So, although higher interest rates are always challenging for loan growth, the wider net-interest margins they create help the bank stocks to see higher profitability, which offsets that weakness.
Technology and industrial stocks
Although industrial and tech stocks make up a smaller portion of the TSX, their strong performance has been a key contributor to its rally in 2025.
Some of the largest stocks in each sector have especially had impressive years. For example, Shopify is up over 55% year to date.
Meanwhile, in the industrial sector, equipment dealers such as Finning International and Toromont Industries have also seen major rallies. Year-to-date, Toromont is up over 47%, while Finning has seen its share price essentially double.
So even though the TSX has had a strong year so far in 2025 and a lot of top stocks have seen significant rallies, much of that growth has come from just a few sectors, meaning there are still plenty of quality names trading cheaply.
