TSX Rallies 1%—Is This the Start of a Comeback?

The Toronto Stock Exchange (TSX) has clawed its way back from the brink, erasing nearly all of this year’s losses with a recent 1% surge. But is this a fleeting rebound or the start of a sustained rally? Let’s dive into the data and dissect what’s driving this move—and where to look for opportunities.

Why the TSX is Turning the Tide

After starting 2025 at 24,898, the TSX faced headwinds from U.S. trade tensions, weak commodity prices, and political uncertainty. But a combination of tariff truces, sector-specific strength, and a weaker Canadian dollar has reignited investor optimism.

First, let’s look at the numbers:

The TSX’s recent 1% gain has brought it nearly back to break-even territory, fueled by a rebound in key sectors. But this isn’t just about luck—it’s about strategy.

The Key Sectors Fueling the Rally

1. Energy: A Volatile but Critical Player
   Oil prices, which had been dragging down the TSX, stabilized after U.S.-Iran nuclear talks de-escalated tensions. Suncor Energy (SU.TO) and Cenovus Energy (CVE.TO) led the charge, but the sector’s future hinges on geopolitical calm and global demand.

2. Gold Miners: The “Safe-Haven” Trade
   Wheaton Precious Metals (WPM.TO) and others soared as gold hit $3,425/oz—a record high—amid fears of U.S. Federal Reserve instability. This inverse relationship between equity volatility and gold prices is a key indicator to watch.

3. Healthcare: Drama and Dividends
   Bausch Health (BHC.TO)’s wild swings—plunging 7% then rebounding 9%—highlight how investor sentiment can shift. But the sector’s 3.6% gain on April 28 after Carl Icahn’s stake disclosure shows that quality stocks with dividends (BHC yields ~3.5%) can thrive amid chaos.

The Wild Cards: Trade Wars and the Canadian Dollar

The TSX’s resilience is impressive, but two risks loom large:
- Trade Tariffs: While Canada avoided new U.S. levies, existing tariffs on autos, steel, and aluminum still crimp exports. A full trade war could slash Canadian GDP by 0.5–1%.
- Currency Pressure: The Canadian dollar’s 1.1% YTD rise to $0.70 USD could hurt exporters if it strengthens further. A weaker loonie would make Canadian goods cheaper globally—ideal for resource stocks.

Action Items for Investors

1. Buy the Dips in Energy: With oil prices stabilizing and geopolitical risks easing, companies like Suncor and Cenovus offer leverage to a commodities rebound.
2. Lock in Gold Exposure: Gold’s ascent isn’t just about safe-haven demand—it’s also a hedge against inflation. Consider ETFs like the S&P/TSX Gold Index (SPTG).
3. Stick with Healthcare Stars: Bausch Health’s dividend and Carl Icahn’s support make it a “buy the rumor, buy the news” play.

The Bottom Line

The TSX’s 1% rebound isn’t just a technical victory—it’s a sign that investors are pricing in resolve. Geopolitical truces, sector-specific strength, and a dividend-friendly environment (TSX yields ~3%) are creating opportunities. However, the path ahead remains fraught with risks, from trade wars to oil volatility.

The TSX’s outperformance of the S&P 500 (-13.7% YTD) by 7.5 percentage points is a wake-up call: Canada’s resource-heavy economy and fiscal flexibility could keep this rally alive—if global calm persists. For now, the bulls are in charge—but stay vigilant.

Final Take: The TSX is back, but don’t forget—this is a market that thrives on commodity cycles and global stability. Keep one eye on the Fed and the other on oil prices. If these stay steady, the TSX’s rebound could turn into a full-blown rally.