S&P/TSX composite finishes lower to end the year, U.S. markets also slide

TORONTO – While Canada’s main stock index finished in the red on the last day of trading for 2025, the S&P/TSX composite index recorded new highs this year, gaining 28.24 per cent and easily outstripping its U.S. counterpart. 

Allan Small, senior investment adviser at iA Private Wealth, said that markets were relatively flat for most of Wednesday, with a sharper selloff occurring in the afternoon. He said the TSX was impacted by a continued sell-off in gold and silver prices. 

“We were all hoping for a bit of a Santa Claus rally … We just haven’t really gotten one,” he said. 

“We had a couple of up days heading into Christmas, but really the last few trading days have been negative.” 

Small added that the market will see greater clarity next week when “everybody comes back from the holidays.” 

“I think the consensus right now for most analysts and including myself, is that we’ll see a positive year, more normalized returns, probably closer to that 10 per cent range plus or minus a little,” he said. 

With the TSX outperforming the major U.S. indexes in 2025, Small said he would describe the performance of Canada’s benchmark index as “unbelievable.” 

“If you asked anybody at the beginning of the year, I don’t know if anybody would have had that on their bingo card,” Small said. 

He noted 2025 has been one of the “few times over the past decade” where the TSX outperformed the S&P 500 index, which gained about 17 per cent on the year. Amid the outperformance of the TSX, Small said the index is “dominated by three sectors” including oil, materials and banking. 

“When you have two out of those three outperforming by a wide margin, you’re going to get a great year on the TSX.” 

With the run-up in Canada’s benchmark index this year, Small said the question now becomes where the next catalyst will come from in 2026. 

“Will the banks continue to have a strong go of it? Will they have as good a year as they have had this year? I’m going to say probably not. Will gold continue to rise? Will silver continue to rise as much as it has in the last year? I’m going to say probably not,” he said. 

“With that in mind, that is why I think a lot of investors think it’s going to be a positive year, but nowhere near 30 per cent gains.” 

The S&P/TSX composite index was down 153.50 points at 31,712.76.       

In New York, the Dow Jones industrial average was down 303.77 points at 48,063.29. The S&P 500 index was down 50.74 points at 6,845.50, while the Nasdaq composite was down 177.09 points at 23,241.99.

While commodities drove the performance of the stock market in Canada this year, Wall Street’s 2025 gains came as investors embraced the optimism surrounding artificial intelligence and its potential for boosting profits across almost all sectors.

But the market had no shortage of turbulence along the way amid U.S. President Donald Trump’s on-again, off-again tariffs on imported goods worldwide and uncertainty over the trajectory of interest rates.

Strong profit reports from companies and three cuts to interest rates by the U.S. Federal Reserve also helped drive markets higher.

Still, the AI frenzy that drove markets in 2025 did not come without concerns. Chief among them is the worry that artificial intelligence technology may not produce enough profits and productivity to make all the investment worth it.

The Canadian dollar traded for 72.96 cents US compared with 73.03 cents US on Tuesday.  

The February crude oil contract was down 52 cents US at US$57.42 per barrel. The February gold contract was down US$45.20 at US$4,341.10 an ounce.

This report by The Canadian Press was first published Dec. 31, 2025.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)