A new poll by the Reuters news agency has found that portfolio managers and other professional investors expect the Toronto Stock Exchange (TSX) to rise 4.5% in 2025.
The survey found that the median prediction of 21 portfolio managers and strategists is for the benchmark Toronto Stock Exchange to rise 4.5% to a peak of 26,550 next year.
Canada's primary stock exchange is set to gain in the year ahead from lower interest rates and a relatively cheap valuation compared to the neighbouring U.S. market.
However, professional money managers expect a slowdown in Canadian equity markets after a record run in 2024 and as U.S. president-elect Donald Trump takes office.
The Toronto Stock Exchange has risen 21% so far in 2024, hitting an all-time closing high of 25,444.28 on Nov. 22.
Canadian stocks have gotten a boost after the Bank of Canada lowered its benchmark interest rate by 1.25% since the start of June this year.
Investors expect further interest rate cuts in coming months and for the Bank of Canada’s trendsetting overnight interest rate to be at 3% by the end of 2025.
Portfolio managers surveyed by Reuters expect the Toronto Stock Exchange to reach 27,500 by mid-2026, a gain of 8.2% from the index’s current level of 25,410.
Despite the strong bull run this year, the Toronto Stock Exchange continues to trail U.S. equity markets, with the benchmark S&P 500 index up 26% so far in 2024.
The Toronto Stock Exchange has very few technology stocks listed on it, with most stocks based in the resource and financial sectors.
In fact, 31% of the Toronto Stock Exchange’s weighting is made up of Canada’s five largest banks.
Additionally, six of eight analysts surveyed by Reuters said they expect a correction of 10% or more in the Toronto Stock Exchange early next year.
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