TSX Surges Past S&P 500 Amid Commodity Price Strength

The Toronto Stock Exchange (TSX) has seen its longest period of sustained outperformance relative to the S&P 500 in nearly two decades. This outperformance occurred despite trade policy uncertainty and a stronger US economy, which normally would benefit from AI-related investments.

A historical review shows that prolonged TSX outperformance is often linked to strong commodity cycles or underperformance of the US economy due to recessions. The current cycle began in February 2025 and has lasted nearly 550 days, making it the third longest episode going back 50 years.

The TSX climbed by nearly 47% since the start of this outperformance cycle, beating the S&P 500 by an impressive 17 percentage points. The materials sector led the way with a gain of nearly 120%, while gold mining companies and Canadian oil producers also performed well.