Canadian Stocks Hit Highest Since June to Extend Dominance Over US

The S&P/TSX Composite Index rose above its 20-, 50- and 100-day moving averages this month, extending a positive run for one of the few major global indexes that has remained in a bull market, even as the S&P 500 fell into a bear market in 2022. At that time, the Canadian index beat the S&P 500 by the most since 2005. Toronto’s key stocks gauge along with European indexes has been outperforming the US benchmark.

“The value factor has been outperforming last year and into this year and that has helped Canada quite a bit. We are a value market,” Craig Basinger, chief market strategist at Purpose Investments, said by phone, adding that commodity stocks like miners and steel producers have outperformed as China loosened Covid-19 restrictions at the start of the year.

To be sure, it’s unclear whether the index will continue to outpace its counterpart as analysts see the same upside from this point forward in the US as in Canada. Wall Street analysts have a 12-month target of 4,511 for the S&P 500, implying 12% upside — identical to the expected upside for stocks in Toronto.

Still, as copper and crude prices continue to climb, some strategists see additional upside in Canadian miners and energy companies that are heavily weighted in the Toronto gauge.

“Should we still see commodity prices looking relatively resilient, we could see the S&P/TSX do better than other indexes,” Desjardins Securities head of macro strategy Royce Mendes said in an interview, adding the relative weighting of natural resources in Canada has helped the market outperform while other exchanges, including in the US, are “more evenly weighted.”