Canada's main stock index surged to a record closing high on Monday, buoyed by hopes of a resolution to the ongoing conflict in the Middle East. The Toronto Stock Exchange's S&P/TSX composite index climbed 1% to close at 34,830.89, surpassing its previous record from March 2.
The market rally was driven by gains in technology and metal mining shares, with the materials sector rising 4.4% as gold prices increased. Shares of Hudbay Minerals and First Quantum Minerals saw significant gains of 8.9% and 8.4%, respectively. Meanwhile, the technology sector added 2.1% and financials ended 0.9% higher.
Investor sentiment was bolstered by reports of Iran's top negotiator and foreign minister engaging in talks with Qatar's prime minister in Doha, aiming for a potential deal with the U.S. to end the three-month war. "There have been repeated false hopes of a resolution, but this is how markets trade ... even a non-zero chance the conflict ends is enough to push stocks higher and oil lower," said Brian Madden, chief investment officer at First Avenue Investment Counsel.
“There have been repeated false hopes of a resolution, but this is how markets trade ... even a non-zero chance the conflict ends is enough to push stocks higher and oil lower.”
Brian Madden, Chief Investment Officer at First Avenue Investment Counsel
Despite the overall positive market movement, the energy sector was the only major group to decline, losing 3.4% as oil prices fell by 6.5%. Much of Canada's oil production is based in Alberta, where political tensions are rising over a potential vote on secession from Canada, described by Prime Minister Mark Carney as "a dangerous bluff."
The TSX has advanced 9.8% since the start of the year, following a 28.2% increase in 2025. Canada's major banks, including Royal Bank of Canada and Toronto-Dominion Bank, are set to report quarterly results later this week, which could further influence market trends.
Background
The TSX's performance reflects investor optimism amid geopolitical developments, particularly in the Middle East. Historically, such geopolitical events have had significant impacts on global markets, influencing commodity prices and investor sentiment.
Looking ahead, investors will be closely monitoring developments in the Middle East peace talks and the upcoming earnings reports from Canada's major banks, which could provide further direction for the TSX.
