Best Canadian Stocks Rally on Energy Momentum Ahead of Key Employment Reports

The benchmark S&P/TSX Composite Index surged to 32,378.64, posting a gain of 243.15 points or 0.76% in Thursday’s session. The strength was primarily driven by crude oil’s upward trajectory, with the energy sector leading nine of eleven industry groups into positive territory. As investors position themselves ahead of Friday’s jobs releases from both Canada and the U.S., market participants are recalibrating expectations for central bank policy actions in the coming months.

Trade Dynamics Shift for Canada

Statistics Canada’s latest trade report painted a more complex picture than recent months. The country swung from a C$243 million surplus in September to a C$583 million deficit in October 2025. Import growth outpaced export expansion, with incoming goods rising 3.4% while outbound shipments increased 2.1%. The U.S. trade relationship showed particular strain, as Canadian exports to the south declined 3.4% while American imports jumped 5.3%. This deterioration compressed Canada’s bilateral surplus with its largest trading partner from C$8.4 billion to C$4.8 billion.

Energy and Commodities Drive Best Canadian Stocks Performance

Within today’s gainers, the energy sector’s 1.89% advance was complemented by broad-based strength across industrials (1.34%), real estate (0.99%), and consumer discretionary (0.98%). Individual stock performance reflected this momentum, with Baytex Energy Corp climbing 6.98%, Vermillion Energy Inc gaining 3.97%, and Cenovus Energy Inc advancing 3.42%. Beyond energy, Cargojet Inc jumped 7.49%, 5N Plus Inc rose 7.14%, and Mda Ltd gained 6.56%. These best Canadian stocks demonstrated investor appetite for cyclical and commodity-linked equities.

Declines in Defensive Sectors

Not all sectors participated in the rally. Financials retreated 0.43%, communication services slid 0.41%, while utilities and IT sectors posted minimal losses at 0.03% and 0.05% respectively. Notable underperformers included DeFinity Financial Corporation (down 2.00%), Power Corp of Canada (down 1.92%), Quebecor Inc (down 2.00%), and Dye & Durham Ltd, which suffered a significant 10.13% decline.

Tariff Pressures and Market Outlook

With trade tensions simmering and tariff headwinds affecting Canadian exporters, market participants are closely monitoring labor market indicators. Tomorrow’s employment data releases will be crucial in determining whether the Bank of Canada and Federal Reserve maintain their current policy trajectories or adjust course. The tension between energy export strength and broader trade headwinds suggests the best Canadian stocks going forward may be those with either direct commodity exposure or reduced trade sensitivity, as the investment landscape continues to evolve amid shifting geopolitical and trade realities.