The Toronto Stock Exchange closed higher again on Wednesday, continuing a streak that has seen in rise in all but one of the past 11 sessions as investors, already bullish on market fundamentals even amid geopolitical turbulence, were further buoyed by optimism around the Canadian economy ahead of the federal government's Spring Fiscal Update scheduled for April 28.
The S&P/TSX Composite Index closed up 53.63, or 0.15%, to 34,155.99, with most sectors higher and Info Tech, up near 3.6%, leading the way for the third successive day. Industrials, down near 0.9%, was the biggest loser.
Tuesday's gains leave the TSX within 400 points of its record close of 34,541.27 hit on March 2. According to FactSet the TSX going in to today was up 4.07% over the past month and up 2,389.60, points or 7.54%, since the start of the year. The index has climbed 36.04% since the Jan.29, 2025 U.S. Inauguration Day.
With the 2026 provincial budget season largely in the rearview mirror, the only major government left to update its fiscal outlook is the Government of Canada, Desjardins noted.
Among highlights in its Federal Spring Economic Statement 2026 Preview, Desjardins said many of the changes since the introduction of Budget 2025 have been in the federal government's favor, particularly in relation to the economy. That, it added, has freed up fiscal room to increase defense spending and transfers to households while still posting an improved deficit and debt outlook relative to the budget.
Desjardins said Canada remains one of the "cleanest fiscal dirty shirts" among advanced economies, and investor demand for government debt reinforces that positive sentiment. Desjardins does not expect a credit downgrade is in the Government of Canada's future, "at least not in the near term".
"But this shouldn't be taken for granted," Desjardins said, before adding: "Despite the economic tailwind, risks loom on the horizon. These include the Canada-United States-Mexico Agreement (CUSMA) joint review and rising interest rates. The Government of Canada would be wise to keep some fiscal powder dry in case it needs to confront these risks."
Last month, National Bank noted, Bank of Canada Governor Tiff Macklem was asked if an oil price shock is net positive or negative for the Canadian economy. Too early to tell was his dissatisfying answer, but he did explain that "the energy sector will do better, while consumers will be more squeezed". According to National Bank, one beneficiary he failed to mention were governments. It said: "Fiscal upside is easy to identify in oil-producing provinces, where crude futures curves imply a significant boost to non-renewable resource revenues. While not directly clipping oil royalties, the federal government stands to benefit too."
For resource-rich nations like Canada, National Bank said, rising commodity prices are "a boon" to the terms of trade. All else equal, this boosts the GDP deflator and overall nominal output, which is strongly correlated with government revenue. Even before the Middle East conflict began, National Bank noted, GDP was trending on a higher plane due to economic resilience in 2025 and positive historical revisions. Together, it suggests that 2026 nominal output could be 4%, or $130 billion, higher than the feds assumed in their fall budget, National Bank added.
National Bank estimates this GDP surprise is consistent with at least $20 billion in additional revenue in 2026-27, plus some upside to 2025-26. It said extra cash last fiscal year is consistent with Ottawa under-borrowing relative to their DMS plan, and interim fiscal results imply the same. However much upside revenue is realized, one key fiscal benchmark has materially improved. Canada's 2026-27 net debt-to-GDP ratio is tracking 1.6%-pts below the budget plan due to the extra GDP.
A natural comparison to this episode, National Bank noted, came in 2022. Back then, surging commodity prices saw an additional $56 billion flow into government coffers relative to earlier plans. National Bank said the windfall will not be as large this time as the demand backdrop is weaker and the basket of commodity prices rising is narrower. "Like four years ago though, it will be difficult to resist spending some of the surprise income. And right on cue, Ottawa temporarily cut federal gas taxes. Still, we'd imagine a government that aims to "spend less" will let some revenue flow to the bottom line."
Of commodities, West Texas Intermediate crude oil closed up by a penny Wednesday as U.S. President Trump again declared the war on Iran is near an end while traders continue to scramble for supply with the closure of the Strait of Hormuz keeping a fifth of daily oil demand off the market. WTI crude oil for May delivery closed up US$0.01 to settle at US$91.29 per barrel, while June Brent oil was up US$0.23 to US$95.02.
Gold moved lower on Wednesday even as the dollar eased, with the price of the precious metal rangebound amid faltering hopes for lower U.S. interest rates as the war on Iran pushes up energy prices. Gold for May delivery was down US$33.80 to US$4,816.30 per ounce.