Canada’s stock market is on a tear — and the rally may just be getting started. After years of underperformance and caution from global investors, the S&P/TSX Composite Index is now beating the S&P 500 in a rising market for the first time since 2016. While the headline drivers have been gold and bank stocks, a quieter shift is unfolding in Canada’s industrial strategy, and it could set the stage for the next major catalyst: energy.
💰 Gold Lit the Match — Energy Could Fuel the Fire
Gold stocks have stolen the show in 2024. A historic run in precious metals pushed the materials sector up 95.3% year-to-date, with gold stocks now representing 12% of the TSX’s market cap — more than double their historical average.
Banks have joined the surge too, delivering 37% YTD returns, buoyed by rising capital markets activity and earnings resilience.
But if gold lit the match, what comes next could sustain the flame: a revived, investable Canadian energy sector.
🛢️ Federal Policy Shift: The Energy Pivot No One Was Expecting
For nearly a decade, Canada’s oil & gas sector has been burdened by global ESG sentiment, regulatory uncertainty, and investor hesitancy. Energy assets were increasingly viewed as stranded — valuable on paper, but politically difficult to grow.
That perception is changing fast.
National Bank strategists argue that the November 4 federal budget delivered a more pragmatic tone toward conventional energy. This shift was reinforced by a federal–Alberta memorandum of understanding later in the month. The agreement allows Alberta to advance fossil fuel development without a federal emissions cap penalty — a major break from years of tension.
🏛️ “We view this agreement as foundational to making Canada investable again.”
— National Bank Strategists
This isn’t a symbolic shift. It signals that the oil & gas industry will no longer be boxed in from growth, and that capital tied up on the sidelines may start to return.
🌍 Why This Matters to Global Investors
Energy has always been one of Canada’s competitive advantages. When regulatory friction eases and global energy demand remains strong, two things happen:
📌 1. Energy assets re-price upward
Oil & gas companies are no longer treated like long-term liabilities. That alone can drive valuation expansion.
📌 2. Foreign investment returns
Capital that avoided Canada due to policy uncertainty can now re-enter, both in upstream production and critical infrastructure (pipelines, LNG, petrochemicals, carbon capture).
📌 3. Ancillary sectors benefit
National Bank explicitly recommends overweighting energy equipment & services, and oil, gas & consumable fuels. A revitalized energy sector creates multiplier effects for labor, construction, manufacturing, and logistics.
💼 Energy’s Revival Also Boosts Real Estate and Jobs
The impact doesn’t stop at drilling rigs. As workers return to offices — pushed by mandates from major banks and public-sector employers — commercial leasing is climbing. Calgary, long tied to oil markets, posted one of the strongest rebounds in absorption.
More energy activity = more hiring
More hiring = more office demand
More demand = stronger commercial markets
The cycle strengthens itself.
🚀 What’s Next for the TSX?
National Bank remains cautious on U.S. equities due to high valuations and volatility, but it sees Canadian markets continuing to power ahead, with the energy sector poised to lead alongside banks and materials.
Add another potential catalyst: progress on Canada–U.S. trade negotiations, which analysts believe is likely in 2025. Energy is a core cross-border economic engine — and friendlier trade terms could supercharge investment further.
🛢️🔥 Conclusion: Canada’s Comeback Is Powered by Energy
Gold and banks may have kickstarted Canada’s market breakout. But the next leg — the one that could spark multi-year momentum — is rooted in something far more foundational:
A strategic return to supporting the country’s most competitive sector: energy.
Canada isn’t just exporting resources — it’s rebuilding investor confidence. And for the first time in a long time, the world is taking notice.
