Mining Boom Lifts Canadian Stocks as Geopolitical Tensions Drive Safe-Haven Trades

Canadian equities closed in positive territory on Tuesday, with the S&P/TSX Composite Index advancing 187.07 points to settle at 32,407.02, marking a 0.58% gain. The rally was spearheaded by a surge in precious metals and mining-related securities, driven by heightened safe-haven demand for gold amid escalating global tensions.

Gold and Mining Sector Outperformance

The materials sector emerged as the clear winner, climbing 3.12% as investors rotated into mining equities. Notable performers included First Majestic Silver Corp (+10.06%), Endeavour Silver Corp (+8.38%), and Perpetua Resources Corp (+6.54%). This outperformance has renewed investor interest in Canadian mining ETF products, which offer diversified exposure to the country’s robust mining sector. Aya Gold and Silver Inc surged 6.43%, underscoring the strength across precious metals plays.

Geopolitical Shifts Reshape Energy Landscape

Recent political developments have significantly reshaped market dynamics. The U.S. government’s intervention in Venezuela’s governance has opened new discussions about American access to vast crude reserves—approximately 303 billion barrels according to the U.S. Energy Information Administration. This strategic shift has raised concerns among Canadian oil exporters about potential market share erosion in the U.S.

In response, Canadian leadership has emphasized the competitive advantage of “low carbon” oil production, positioning domestic energy exports as a differentiated alternative in North American markets.

Economic Signals Send Mixed Messages

Data from S&P Global revealed concerning trends in business activity. The Composite PMI stood at 46.7 in December 2025, up marginally from November’s 44.9 but remaining below the critical 50.0 threshold for the second consecutive month. Manufacturing PMI inched to 48.6, while Services PMI improved to 46.5 from 44.3. However, new work volumes continued their downward trajectory for the thirteenth consecutive month, signaling persistent economic headwinds.

Rate Cuts May Have Run Their Course

The Bank of Canada has reduced rates to 2.25% through four quarter-point cuts, with officials previously signaling that levels are “about right.” With economic momentum slowing, analysts believe the easing cycle may have concluded. Meanwhile, U.S. markets are pricing in just a 16.1% probability of a Federal Reserve rate cut at month-end.

Trade Agreement Uncertainty Looms

Attention is now fixed on the upcoming CUSMA review—the Canada-United States-Mexico free-trade agreement. This pact has been critical for Canadian exporters seeking to navigate Trump’s 35% tariffs on U.S.-bound shipments. With renegotiation signals already emerging, market participants face uncertainty about the framework’s future.

Sectoral Divergence Persists

Beyond materials, Information Technology (+2.14%), Consumer Discretionary (+1.62%), and Industrials (+1.02%) logged gains, with six of eleven sectors posting advances. Conversely, Energy (-0.72%), Consumer Staples (-0.69%), Financials (-0.60%), and Communication Services (-0.48%) retreated. Notable decliners included Baytex Energy Corp (-3.39%) and Enerflex Ltd (-4.10%), reflecting headwinds in the oil and gas space.

The divergence between mining strength and energy weakness highlights investors’ preference for safer commodity plays amid macro uncertainty.