Canada’s Big Comeback: Markets, Momentum, and Major Projects

October 8, 2025

4 minute read

By the time September 2025 rolled around, the markets looked a lot like the season itself—unexpectedly vibrant. At AGF’s Toronto headquarters, David Pett sat down with John Christofilos, AGF’s Chief Trading Officer, and Mike Archibald, VP and Portfolio Manager, to talk about why this Fall feels different ¹. What started as a chat about weather and hockey turned into a deeper look at Canada’s market resurgence and its renewed focus on doing what it does best—building, producing, and exporting.

“We were punched in the face,” says Christofilos of the past few years, “and we came out with elbows up.”

September Broke the Rules

Historically, September is when traders brace for pain. Not this time.

“All the chatter was, ‘go to cash, it’s a bad month,’” says Christofilos. “But the market’s been constructive.” Materials are up 14%, energy up 6%, and communication services in the U.S. are also climbing. “Both markets are in positive territory,” he adds.

Archibald doesn’t buy the old seasonal playbook either.

“Seasonality matters,” he says, “but you don’t make decisions on it alone.” The real story, he explains, is the combination of the AI boom and a cyclical rotation toward traditional sectors like energy, industrials, and materials. “The TSX in Canadian dollars is up double the S&P—20% versus nine,” he says. “That’s not nothing.”

With most central banks cutting rates and cash still waiting on the sidelines, Archibald sees plenty of room to run. “There’s still a lot of money looking to get to work,” he says. “CapEx, GDP, earnings—we see all of it improving into 2026.”

Back to Basics: The Real Economy Is Back

The high-flying tech phase is giving way to something sturdier—companies with assets, cash flow, and discipline. “Cyclicals are leading,” says Christofilos. “If that continues, this market will grind higher.”

He lists the proof: retail traders are still active, buybacks are strong, and sentiment—oddly enough—is low. “And that’s good,” he says. “When people sound negative, I like to be on the other side of that trade.”

Archibald agrees, with a word of realism. “A three-to-five percent pullback isn’t bad—it’s healthy,” he says. “You clear out the hot hands, and then the market reaccelerates.”

The takeaway: the optimism isn’t blind—it’s balanced. “The Russell just made a new high for the first time since 2021,” says Archibald. “That’s not a one-and-done move.”

Global Rotation, Local Advantage

Archibald’s global lens gives him confidence beyond North America. “We took money out of the U.S. and into Europe earlier this year—and it’s worked,” he says. China, long left for dead, is showing early signs of revival. “Large, small, and mid-cap names all look like they’re starting to reassert.”

Even Japan, after a massive run, “still looks solid.” Across the board, he says, “Many markets are trading above key moving averages, earnings are improving, and rate cuts are helping. I don’t see global equities rolling over.”

Christofilos points out the bigger picture: “The U.S., China, and Mexico—three of America’s biggest trading partners—are among the best-performing markets right now.” Tariff fears, he says, are old news. “We rarely even talk about them anymore.”

Canada’s Major Projects Moment

That leads naturally to Canada’s biggest economic headline:

Prime Minister Mark Carney’s Major Projects Office. Five major initiatives have just been approved—LNG in B.C., a nuclear facility in Bowmanville, a Quebec container terminal, and new or expanded mines in Saskatchewan and northern B.C.

Archibald sees this as a pragmatic shift.

“You sell what you can do cheaper than the rest of the world—and for Canada, that’s resources.”

He calls it “pro-business and pro-growth,” predicting a surge in job creation and global demand for Canadian commodities.

Christofilos is even more direct: “This is a wake-up call for Canada. We’ve got to get it out of the ground and into other parts of the world. If we execute on Carney’s plan—and get bureaucracy out of the way—the economy will roar forward over the next three to five years.”

The Sector Shakeout

The rally in materials, Archibald says, is less about politics and more about fundamentals. “It’s a weak U.S. dollar and central banks buying gold,” he explains. “We’re in a two-year bull market for gold stocks.”

Energy, he adds, could be the contrarian story of 2026. “You need oil, you need gas, and these companies have been left for dead. That’s where the opportunity is.”

Financials are also quietly outperforming. “Every Canadian bank is near an all-time high,” Archibald says. “The housing fears never showed up. Credit losses? None.” Together, he notes, “financials and resources make up 80% of the index. That’s why Canada’s structure has worked so well.”

Foreign investors seem to be noticing too. “We’re getting calls from dealers abroad again,” says Christofilos. “Banks, gold miners, asset managers—they’re all back on the radar.”

North America Rising

Both Archibald and Christofilos agree that Canada’s edge over the U.S. will likely narrow as American GDP picks up steam. But neither is worried. “I’m bullish on North America,” says Christofilos. “I’m not picking sides.”

For now, breadth is back, and that’s what matters. “Small caps have a pulse again,” he says. “The market’s widening out. That’s good for everyone.”

Actionable Takeaways for Advisors

Broaden the playbook. The rally isn’t just about mega-caps anymore—cyclicals, small caps, and international equities are back in play.
Follow Canada’s lead. The Major Projects Office could reshape the country’s growth story. Watch materials, infrastructure, and energy.
Stay calm in pullbacks. As Archibald notes, “Three-to-five percent drops happen five to seven times a year.” Treat them as chances, not threats.
Track global capital flows. With rate cuts spreading, money is rotating—follow it toward Europe, Canada, and emerging markets.

In a world rebuilding its physical and economic foundations—grids, factories, supply chains—Canada’s “major projects” might be more than policy. They could mark the start of a new growth cycle, built on fundamentals rather than headlines.