Canadian Stocks Outperforming U.S. as Global Markets Could Outperform S&P: Rosenberg Research VP

The Canadian stock market is defying expectations this year with a strong rally that has outperformed its U.S. counterpart, the S&P 500. While the S&P 500 has been propelled by just a few high-flying tech stocks, the S&P/TSX Composite Index in Canada has shown broad-based strength with two stocks advancing for every one that falls.

Investors and analysts are taking note of this trend, with some pointing out the concentration risk in the S&P 500 due to its heavy dependence on a few key stocks. This became evident recently when weakness in these tech giants led to a 1% drop in the entire index.

On the other hand, Canadian stocks have been held back by some of the largest firms, including Shopify Inc. and the country’s Big 3 telecommunications stocks. Despite this, strategists are forecasting more upside for the Canadian benchmark, predicting a 12% gain compared to a 6.5% increase for the S&P 500 over the next 12 months.

With the TSX trading at a significant discount relative to the S&P 500, experts believe there is potential for a catch-up in performance. The strong foundation and opportunity for growth across various sectors in Canada have investors optimistic about the market’s future prospects.

In a market environment where a handful of top-performing stocks can drive significant gains, the diversity and resilience of the Canadian stock market are proving to be a valuable asset for investors looking for stability and long-term growth.