Canadian Stock Market Performance and Early Themes for 2025

Today’s focus will be on the Canadian stock market, reviewing year-to-date performance and assessing early leaders and laggards on the TSX. Looking back at the 1-month performance for the Canadian stock market, the S&P/TSX 60 large-cap index is leading with a monthly gain of 3.39%, while the broader S&P/TSX Composite Index is up 2.73%. In the mid- and small-cap space, the S&P/TSX Canadian MidCap Index and S&P/TSX SmallCap Index are up by only 0.03% and 1.05%, respectively. Major themes for the month have been dominated by potential tariff threats from the United States, set to take effect soon, as well as another round of interest rate cuts from the Canadian central bank following a low inflation report. This has allowed the Canadian government to ease fiscal tightening measures once again in 2025, having starting the easing cycle in 2024. Another significant theme for early 2025 has been the rise in natural gas prices, up 55.70% over the past six months. While the price has relaxed by -6.30% in the past month, it remains considerably higher than last year, which is expected to boost Alberta’s GDP and likely Canada’s economy as a whole. Canada's resource-heavy market, particularly in energy stocks, has seen volatility tied to global oil and gas prices but TSX’s heavy energy weighting means that positive shifts in commodity prices may significantly impact its performance. Another bright spot is Canada's base and precious metal production, which may benefit from all-time-high prices in gold and silver.

S&P/TSX Composite Index: Technical Analysis

To identify the leaders and laggards of the market, the SIA S&P/TSX 60 Index Report on the SIA platform provides valuable insights. Thousands of comparison calculations are performed daily for SIA practitioners, enabling efficient and informed decisions regarding optimal portfolio holdings. The top of the matrix is dominated by two strong precious metals stocks, Kinross Gold Corp. (K.TO) and Agnico Eagle Mines Ltd. (AEM.TO), which have seen significant moves early in 2025, with gains of 19.42% and 14.61%, respectively. Following them is consumer non-durable stock Gildan, up 10.31% in January, along with newcomer Shopify, which has gained 7.97%. Positions 5 and 6 are occupied by a pair of Brookfield investments, with financial stocks Manulife and CIBC not far behind.At the bottom of the list are the usual laggards from last year: BCE, Rogers, and Telus, which continue to underperform compared to other global telecom stocks. CN Railway and OpenText also struggle to attract investor interest. An unusual case is Barrick Gold Corp. (ABX.TO), which has experienced a stark contrast in performance compared to Kinross and Agnico, with a decline of 17.99% over the past three months and only a modest recovery of 1.86% in January 2025. Notably, the contrast in SMAX scores is evident, with the top names on the list having scores of 6 or higher, often pinned at 10/10, while the laggards have scores below 1/10, and in most cases, 0/0. This suggests that investors may find better opportunities in alternative asset classes, including holding cash.

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