Canada’s main stock index is projected to hit a new record by the end of 2025, driven by lower borrowing costs, though global trade uncertainty could limit gains and trigger a market correction, according to a Reuters poll.
A survey of 19 portfolio managers and strategists from February 13-25 predicts the S&P/TSX Composite Index (.GSPTSE) will rise 5.4% to 26,500 by year-end, surpassing January’s record high and approaching the 26,550 target set in November. By mid-2026, the index is expected to reach 26,710, marking a 6.2% gain, though down from the previous 27,500 forecast.
U.S. President Donald Trump reaffirmed plans to impose tariffs on Canadian and Mexican imports, despite efforts to enhance border security and curb fentanyl trafficking ahead of the March 4 deadline. With about 75% of Canada’s exports heading to the U.S., trade tensions remain a key concern.
“Canadian equities are likely to underperform relative to historical averages due to uncertainty around trade policies, which could weigh on both Canadian and global growth,” said Tiago Figueiredo, a macro strategist at Desjardins.
Companies with greater exposure to the U.S. are expected to face challenges if tariffs are enforced. Stocks of trade-sensitive firms have already declined since Trump’s re-election, with snowmobile maker BRP Inc (DOO.TO) dropping nearly 17%, along with declines in steel, lumber, aerospace, and auto parts.
“Uncertainty about trade issues will hamper investment in Canada,” noted Michael Sprung, president of Sprung Investment Management, emphasizing that companies will likely adopt a cautious approach in resource allocation.
Eight of 14 analysts foresee slower earnings growth in 2025 compared to 2024, while 14 of 15 believe a market correction of at least 10% is probable.
Despite trade risks, key sectors such as financials, telecom, real estate, energy, and materials—comprising roughly two-thirds of the TSX—are expected to either avoid direct tariff impact or benefit from carve-outs. Analysts also point to a weaker Canadian dollar and lower interest rates as potential market drivers.
The Bank of Canada has cut its benchmark interest rate by two percentage points since June, bringing it to 3%.
“Uncertainty is high, and volatility is likely to increase in the coming months,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
Source: Swifteradio.com
