Poll: TSX to rise 2.3% by year-end on trade certainty hopes

Globe and Mail

a day ago

Canada's main stock index is set to extend its record-setting run this year and next as lower borrowing costs along with potentially greater clarity on U.S. tariffs offset expected pressure on corporate profits, a Reuters poll found.
The median prediction of 20 equity strategists and portfolio managers in the August 7-18 poll was for the S&P/TSX Composite Index to rise 2.3% to 28,553 by year-end, moving above last Wednesday's record closing high and easily eclipsing the 26,250 mark expected in a May poll.
The index is forecast to reach 30,000 by the end of 2026, a gain of over 7%, versus the previous prediction of 27,750.
'We are embracing the idea of a renewed bull market for the S&P/TSX Composite Index,' said Philip Petursson, chief investment strategist at IG Wealth Management.
'With the U.S. tariff issues largely known and/or resolved, we have a clearer path forward for the impact on stocks.'
The TSX index has rallied more than 25% from an April low as investors globally have become less fearful of U.S. tariffs.
The U.S. has increased tariffs on Canadian goods to 35% from 25% but products covered by the U.S.-Mexico-Canada Agreement are exempt from duties. About 92% of Canadian exports to the U.S. in June were exempt under that trade agreement.
Canada's jobs market could deteriorate in the near-term but the prospect of more certainty on tariffs and additional interest rate cuts could provide a better set-up for the economy going into next year, said Michael Dehal, a senior portfolio manager at Dehal Investment Partners at Raymond James.
The Bank of Canada has opened the door to additional interest rate cuts if upward pressure on prices from trade disruptions is contained. The central bank has lowered its benchmark rate by 225 basis points since June 2024 to 2.75%.
Still, six of 11 analysts that answered a separate question said corporate earnings would be marginally lower in the second half of 2025 compared with the first half.
'Consumer-facing sectors are likely to remain under pressure, and the ramp-up in AI investment is increasing costs without yet delivering clear revenue uplift,' said Victor Kuntzevitsky, a portfolio manager at Stonehaven, Wellington-Altus Private Counsel. 'However, resource and export-oriented companies may help cushion the overall impact.'
The energy and materials sectors, which include oil and metal mining shares, account for 30% of the Toronto market's weighting. While the price of oil has slipped since the start of the year, gold has surged 27%.
'Tactical pullbacks should be viewed as opportunities to add exposure, as the bull market appears well supported by underlying fundamentals,' said Angelo Kourkafas, a senior global investment strategist at Edward Jones.
U.S. forecasts
The S&P 500 benchmark U.S. stock index will end 2025 just below current near-record levels, reflecting tempered optimism amid ongoing concerns over the economic impact of President Donald Trump's global tariffs and uncertainty surrounding Federal Reserve rate cuts, according to a separate Reuters poll.
Market strategists polled by Reuters showed that concerns about potential stagnation related to tariffs have dampened optimism about Wall Street's rally in AI heavyweights.
'I do not anticipate the United States entering a recession; however, I do expect the economy to experience a slowdown,' said Robert Pavlik, senior portfolio manager at Dakota Wealth. 'Many employers lack visibility into future conditions and are therefore delaying expansion.'
The S&P 500 will end 2025 at 6,300 points, equivalent to a 2.3% dip from current levels, according to the median estimate of 35 strategists, analysts and portfolio managers polled August 7-19.
The S&P 500 ended Monday at 6,449.15 points, down 0.3% from its record high close on August 14.