CANADA STOCKS-TSX records biggest annual gain in over 15 years despite year-end retreat

By Avinash P

Dec 31 (Reuters) - Canada's main stock index closed down on Wednesday, as falling metal prices pressured mining stocks and pulled the benchmark lower on the final trading day of a remarkable year for Canadian equities.

The S&P/TSX Composite index .GSPTSE closed down 0.4% at 31,712.76 points extending its decline for a fourth consecutive session to hit its lowest level since December 19.

Despite the year-end retreat, the commodity-heavy benchmark remains poised to close 2025 with impressive gains. The index has risen 1.3% in December alone, on track for its eighth consecutive monthly advance in a streak not witnessed since 2017.

The TSX's nearly 29% surge this year also positions the index for its strongest annual performance since 2009, marking three straight years of gains and outpacing the benchmark S&P 500 in the U.S., which is on track to end 17% higher this year.

The stellar performance has been driven by soaring gold and silver prices amid heightened geopolitical tensions, which have nearly doubled miners' shares, and advances in heavyweight financial stocks. The sectors collectively represent about two-thirds of the index's weight. However analysts remain skeptical if this momentum will continue.

"The concern that I have is that if we do have a shift in the commodity cycle- how much does that actually deflate the exuberance that we're seeing right now," said Shiraz Ahmed, CEO Sartorial Wealth.

Josh Sheluk, a portfolio manager at Verecan Capital Management, said 2026 will likely see more modest returns for the Canadian benchmark compared with 2025, primarily because the materials and precious metals sectors are unlikely to repeat their remarkable growth.

On Wednesday, the mining sector led losses on the TSX as gold XAU= and silver XAG= prices slipped, with materials .GSPTTMT and gold .SPTTGD stocks both declining 0.5%.

Most other sub-indexes were also in negative territory, while trading volumes remained thin ahead of the New Year holiday.