TSX nears record high as bank earnings boost optimism

Canada's main stock index rose toward record highs on Thursday, outperforming U.S. stocks, after the latest round of bank earnings underscored resilience in the economy despite tariff uncertainties.

The S&P/TSX Composite index TSX rose 0.7% to 31,388.30 points by 10:22 a.m. ET, trading just below last week's intraday record high of 31,411.01 points.

Canadian lenders TD Bank TD, Bank of Montreal BMO and CIBC CM topped analyst estimates for fourth-quarter profit on Thursday, boosted by their capital markets businesses that benefited from a rebound in dealmaking and higher trading revenue.

TD and CIBC shares touched record highs, but BMO shares dipped.

The big six banks, which also include Royal Bank of Canada RY, Bank of Nova Scotia BNS and National Bank NA that have already reported, wrapped up fiscal 2025 with earnings that exceeded expectations, despite challenges from a sluggish domestic economy and tariff uncertainties due to changing U.S. trade policies.

"The glass half-full interpretation is markets are forward-looking. The fact that markets are strong is probably discounting an improving economic backdrop going into 2026," said Brian Madden, chief investment officer at First Avenue Investment Counsel.

U.S. stocks were mixed as traders assessed mixed economic data.

Investor sentiment has been buoyed by expectations of a U.S. interest rate cut next week. Traders are pricing in an 87% probability of a December rate cut, up from 83% a week ago, according to CME Group's FedWatch tool.

Ahead of a Bank of Canada rate decision next week, a survey showed Canadian economic activity contracted in November for the first time in six months as a measure of employment declined.

The energy index TTEN was up 0.8% on Thursday as oil prices BRN1!, CL1! rose after Ukrainian attacks on Russia's oil infrastructure signaled potential supply constraints.

Logistics software firm Descartes DSG jumped 9.8% after its third-quarter revenue beat estimates.