Folks, what a year 2025 was for the TSX. Indeed, investors in the Canadian stock market (and those of many other developed nations) crushed investors focused primarily on U.S. stocks. That’s a scenario many investors didn’t see coming, given the relative strength of U.S. stocks in recent years.
That said, with the TSX surging roughly 29% in 2025 (much better than the approximately 18% gains U.S. investors saw), the key question many investors have right now is whether this trend can continue.
Here’s why I think the answer to that question is yes.
Source: Getty Images
Why the TSX outperformed in 2025
Commodity kings led the charge. For investors who haven’t been completely ignoring the news, gold and silver prices exploded amid geopolitical jitters. Oil prices have remained robust. And everything from copper to nickel to uranium are surging, as demand for battery minerals and any inputs into renewable energy surged.
The good news for investors in the Canadian market, Australian market, and other resource-intensive economies is that investors in the TSX for example get excellent exposure to all these trends. I continue to hammer home the message that a commodities bull cycle is likely underway, and this is one that could last a long time. That’s a thesis I think will hold true in 2026 and for many years to come.
For those looking to gain exposure to some of the best energy stocks, buying an index fund tracking the TSX is an excellent option. And for those looking to pick individual names in this sector, I’d recommend checking out one of my numerous pieces on top-tier opportunities in this sector.
Why I think this rally could continue into 2026
Aside from the ongoing bull market cycle I think will play out in commodities, there are other key tailwinds supporting a continued rise in Canadian equities.
Low interest rates, a steepening yield curve, and rising net interest margins are boosting shares of leading Canadian financial institutions. With a top-heavy industry on this front (and a very regulated back end market), Canadians stocks in the financial sector had one heck of a year in 2025. I’d expect to see continued strength this year and for years to come.
With diversification need remaining robust, I think global investors will continue to look at high-performing markets like the TSX and consider adding exposure. Even after last year’s incredible outperformance, Canadian equities remain undervalued on a relative basis. Thus, I think there could be plenty of lead left in the pencil for those looking to traverse these uncertain times.
