Canadian equities are on track to close out their second-best year this century, defying expectations and setting a record for new all-time highs. The S&P/TSX Composite Index soared more than 40% from an April 8 low, positioning it to end 2025 with a 29% advance. This performance trails only 2009's 31% gain as the best ever recorded.

The index notched a record 63 new all-time highs throughout the year, fueled by a consistent upward trend over the final seven months. This "jaw-dropping" performance occurred despite significant political and economic uncertainty earlier in the year, including harsh tariffs imposed by the United States and heightened tensions between the two countries.

The market's resilience can be attributed, in part, to a shift in political leadership. When Technocrat Mark Carney assumed the role of prime minister, financial market jitters eased, and tensions with the US cooled. Furthermore, Canada's economy, heavily reliant on miners and internationally renowned financial firms, proved to be well-positioned to navigate the complexities of the evolving global landscape.

Miner and bank stocks played a crucial role in the rally. The materials subindex, in particular, experienced substantial growth, doubling in value. This surge reflects the strength of Canada's mining sector and its ability to capitalize on global demand for resources.

Looking ahead, the performance of Canadian equities will likely depend on continued stability in international trade relations and the ability of key sectors, such as mining and finance, to maintain their momentum. While the exceptional gains of 2025 may be difficult to replicate, the underlying strength of the Canadian economy suggests a positive outlook for the market in the coming year.