The S&P/TSX Composite Index has reached a significant milestone, surpassing the 30,000 mark for the first time. This achievement comes amid a rally that has seen the index rise 0.3 percent, marking 45 closing records this year, the highest since the recovery from the COVID-19 pandemic in 2021.

Despite ongoing tariff threats and a weakening economy, Canadian stocks have shown resilience. The rally is attributed to stronger-than-expected corporate earnings, a shift towards gold investments, and easing borrowing costs. Analysts anticipate that upcoming interest rate cuts from the Bank of Canada will further boost the market.

Philip Petursson, chief investment strategist at IGM Wealth Management, noted, "It’s a big milestone obviously because it’s a nice round number." He believes that the index's strong performance this year will encourage investors to reconsider the TSX.

The Toronto Stock Exchange is on track to outperform the S&P 500 Index for the first time in an up year for both markets since 2016. During that year, the TSX experienced a smaller loss than the S&P 500 amid a downturn.

Corporate earnings in Canada have exceeded expectations, with TSX stocks reporting earnings 7.5 percent above forecasts. Hugo Ste-Marie, director of portfolio and quantitative strategy at Scotiabank, expressed surprise at the results, stating, "If we had to describe it in one word, we would say: wow!"

Gold miners have been a primary driver of the TSX's success this year, as gold prices have reached all-time highs. Candice Bangsund, a portfolio manager at Fiera Capital Corp., highlighted that gold accounts for nearly 12 percent of the TSX. The materials sector, which includes gold and other mining companies, has surged 72 percent this year, with significant gains from companies like Discovery Silver Corp. and SSR Mining Inc.

Looking ahead, Bangsund believes that the materials sector will continue to support the TSX through 2026. She stated, "Even if there’s decreased demand for oil products or materials products from the U.S. from Canada, if a product like gold is becoming more expensive on net, it creates a bit of a buffer, a bit of an offset for stocks."

The anticipated interest rate cuts are expected to benefit gold and other rate-sensitive sectors, including utilities and telecommunications. Brian Madden, chief investment officer at First Avenue Investment Counsel, remarked, "The rate cut advantages everything."

Several individual stocks have also contributed to the index's rise. Toronto-Dominion Bank and Shopify Inc. have been particularly influential. TD Bank has rebounded sharply this year after facing challenges in 2024, while Shopify has seen significant growth, briefly becoming Canada’s most valuable stock.

Overall, Canada’s banks have performed better than expected despite economic challenges, with most of the Big Six banks exceeding analyst expectations in the third quarter. The TSX's performance reflects a broader shift in investor sentiment, suggesting potential for further gains as the economy stabilizes.