Canadian markets entered the final day of July 2026 near record territory, with the S&P/TSX Composite reaching an all-time high of 35,760 points earlier in the month before pulling back slightly to trade around 35,225. The index is up roughly 29% year-over-year, outpacing the S&P 500 for the second consecutive year.
Big Six Banks Carry the Index
Canadian bank stocks have been the dominant force. The S&P/TSX Bank Index generated a total return of 31.7% in the first half of 2026, driven by strong capital markets revenue, recovering credit quality, and the Bank of Canada's rate hold at 2.25%. Royal Bank of Canada, TD Bank, and Bank of Montreal all trade near multi-year highs.
However, analysts are growing cautious. Economist David Rosenberg recently added Canadian banks to his bubble watchlist, noting they now represent more than 25% of the TSX, an unprecedented concentration. The Big Six trade at roughly 15 times expected 2027 earnings, well above the historical average of 11 times.
Housing: Stabilisation After a Long Correction
After four and a half years and a 20% decline in national average home prices, Canada's housing market has finally stabilised. The predicted mortgage-renewal cliff of 2025 never materialised as borrowers and lenders managed the transition to higher rates without a surge in defaults.
Recovery remains uneven. Ontario and British Columbia continue to struggle with affordability and elevated inventory, while Alberta and Atlantic Canada show stronger activity. Rising government bond yields are pushing fixed mortgage rates higher again, which could test the stabilisation narrative in late 2026 and 2027.
Cross-Border Spillover from U.S. Tech
The U.S. tech earnings rally has mixed implications for Canada. Shopify fell 4.8% on July 30, reflecting company-specific pressures, while semiconductor and AI-linked names globally benefited from the Amazon-Microsoft earnings boost. Canadian pension funds and retail investors with U.S. equity exposure are seeing portfolio gains that offset domestic housing weakness.
Expected U.S. tariffs toward the end of July could reignite inflation concerns and put upward pressure on Bank of Canada rate expectations. For crypto investors, Canada's mature spot Bitcoin ETF market provides a regulated entry point, though global risk sentiment remains the primary price driver. See our global markets roundup for the full picture.