Will S&P/TSX Composite Index Break Its All Time High Next Year?

On the verge of the Christmas holidays, let’s recap the results of the Canadian stock market. Year-to-date, January 1, 2016 to late November 2016, the S&P/TSX Composite Index rose by about 16%. If this level for the index holds or improves by the end of the year, it will be the best annual return since 2009. This is also going to be the first year since 2009 when the S&P/TSX Composite Index returns more than the S&P 500 index. The latter so far has posted a 10.5% gain year-to-date. The year 2016 is promising to make the S&P/TSX Composite Index the best performer among developed markets indices.

TSX Index and S&P 500 Index Comparative Growth, 12 Months (source: web.tmxmoney.com)

Behind this strong performance is the growth of commodity prices in 2016. The Bloomberg Commodity Index year to date has risen by 9%. Two major commodities, gold and oil, have risen by 11% and 24% (WTI Crude) respectively, year-to-date.

Going forward, the health of major commodity markets will likely continue influencing the dynamics of the Canadian stock market. If oil and metal prices remain strong, the S&P/TSX Composite Index may well break its all-time high of more than 15,600 points, set in September 2014. So far, this year’s high is at around 15,100 points.

 
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