It makes little sense, when viewed from early April, that Canadian equities are closing out their second-best year this century. 

Donald Trump had just unleashed the harshest tariffs since The Depression, effectively choking off trade and tearing up a trade agreement he had negotiated. The US president was also openly discussing annexing Canada, stoking unfathomable tensions between the two long-time allies. Political turmoil added to unease up North.

Then Trump backed down from his most punishing tariffs. Technocrat Mark Carney took over as prime minister, easing financial market jitters and cooling tensions with his US counterpart. And, it turned out, Canada’s economy — driven by miners and internationally renowned financial firms —  was perfectly situated for the chaos of Trump’s new world order.

The S&P/TSX soared more than 40% from an April 8 low, putting the gauge on track to end 2025 with a 29% advance, trailing only 2009’s 31% gain for the best ever. The index notched a record 63 new all-time highs along the way, owing to a steady march higher over the year’s final seven months.

Miner and bank stocks have been central to the rally, with the materials subindex doubling on the back of rallies in gold, silver, copper and palladium. The financials group jumped 40%. Tech darlings like Shopify Inc. and Celestica Inc. have also contributed, moving the index by a combined 11% higher during the year. 

“The numbers themselves are somewhat jaw dropping,” said IG Wealth Management chief investment strategist Philip Petursson by phone. “But, I mean, you could sit there and say this is still a well-balanced market that has further upside in 2026.”

The fuel for the rally that powered precious metals to new records may not be spent. Three Federal Reserve rate cuts were a boon to an asset class that doesn’t pay interest. The US central bank is expected to cut twice in 2026. 

Gold and silver also served as a safe haven for traders worried about uncertainty around US trade policies and geopolitical tensions in Europe and the Middle East. Neither of those concerns have been laid fully to rest.

Petursson said he sees further runway for gold prices to continue supporting the S&P/TSX Composite index, but not to the same degree the markets have seen in the past year. 

“It would be foolish to just extrapolate this year’s gains into 2026,” he said, noting though that “the fundamentals are still there” as central banks are expected to continue cutting rates. 

Canada’s Big Six banks, including Toronto-Dominion and Bank of Montreal, posted stronger profits than expected over the year with the annual adjusted earnings coming ahead of Bloomberg consensus expectations by an average of 2 percentage points.