- Canadian equities to continue growth but at a slower pace in 2025.
- Rising corporate profits, lower interest rates, and strong commodity prices will support growth.
- Political risks, trade tensions, and tech stock over-valuation may limit performance compared to U.S. markets.
The Canadian equity market is set for another year of growth in 2025, though at a slower pace compared to 2024. Economic growth, rising corporate profits, and an anticipated gradual decline in interest rates will provide a solid foundation for the market.
However, several risks could overshadow Canada’s equity performance. Ongoing trade uncertainties, particularly tariff threats from the U.S., and overvalued tech stocks in the U.S. are potential headwinds.
Slower Canadian Equity Growth Expected in 2025 Despite Strong Fundamentals
In 2025, Canada’s equity market is predicted to show solid, albeit slower, growth compared to 2024. Analysts believe that rising corporate profits, supported by lower interest rates and strong commodity prices, will keep the bull market alive. Notably, the energy and materials sectors are expected to see a rebound, which will contribute to overall market growth.
However, geopolitical and economic risks, such as tariff threats from the U.S. and over-valuation in the tech sector, pose potential challenges for Canadian investors. While many analysts remain optimistic about the TSX’s long-term growth, they warn of the possibility of heightened volatility and a slower pace of gains.
The Canadian financial sector is also expected to benefit from a boost in mortgage renewals, which could add further profitability in the second half of the year. A weaker Canadian dollar could also attract foreign investment, providing additional support for the market.
Ultimately, while the TSX may underperform compared to the U.S. market, the resilient Canadian consumer, softening inflation, and rising wages should provide enough support for steady growth. Diversifying investments, both geographically and sector-wise, could mitigate risks and offer long-term stability.
Despite the challenges facing Canada’s equity market, such as political uncertainty and potential tariff risks, solid corporate earnings, lower interest rates, and sectoral growth offer a positive outlook for 2025.
“There’s a very strong relationship between the TSX and corporate profits.” – Angelo Kourkafas.
