The TSX Could Extend Its Bull Run in 2026 (Minus 3 Factors)

The TSX had a stellar performance last year, notching up 63 record highs and posting its best annual gain since 2009. On January 19, 2026, Canada’s primary equity market closed at a fresh record of 33,091.

However, despite the plus-4.4% surge from year-end 2025, most analysts doubt the index can sustain the momentum throughout 2026. Nonetheless, despite the current market conditions, selected Canadian stocks are buying opportunities, if not strategic plays.

Three obstacles

Higher volatility is widely anticipated in 2026. The first drag is the heightened geopolitical risks following an American military invasion in Venezuela. U.S. President Donald Trump’s expressed interest and invasion threats on Greenland could result in a diplomatic and economic crisis.

Sticky inflation remains a concern. The latest inflation reading showed an increase from 2.2% in November 2025 to 2.4% in December. However, the consensus is that the Bank of Canada will maintain its 2.25% interest rate throughout 2026. According to some market analysts, price pressures, including gasoline, are cooling and not enough to trigger a rate cut.     

The largest headwind for Canadian stocks is the upcoming review of the Canada-United States-Mexico Agreement (CUSMA) on July 1, 2026. The Canadian side wants a renewal, but Trump intimated the trade pact is irrelevant and has threatened not to renew it. Marcelo Ebrard, Mexico’s Economy Minister, said CUSMA is intact and confident the three countries will close a deal to extend it.

Domestic-focused

Bird Construction (TSX:BDT) stands out as it enters 2026. In addition to backlog strength, the stock is less sensitive to CUSMA. The $1.7 billion company provides construction services primarily in the domestic market, including Canadian infrastructure.

As of September 30, 2025, Bird has a combined backlog and pending backlog of over $10 billion, a massive cushion against economic volatility. The latest milestone is the acquisition of Fraser River Pile & Dredge, an expert in marine infrastructure, land foundations, and dredging. Its President and CEO, Teri McKibbon, said the deal expands Bird’s self-perform platform and broadens the solutions for clients.

McKibbon added that Bird is well-positioned to pursue and win work related to the country’s nation-building infrastructure initiatives in 2026 and beyond. At $29.90 per share, BDT pays a decent 2.8% dividend.

Safe Harbour

ARC Resources Ltd. (TSX:ARX) is a natural gas play and reliable source of dividend income. The $13.7 billion upstream energy company is the largest pure-play producer in the world-renowned Montney formation. At $24.20 per share, investors partake in the 3.5% dividend.

The product mix of the company-owned infrastructure assets is natural gas (60%) and condensate and liquids (40%). Most contracts to supply natural gas to international liquefied natural gas (LNG) terminals are long term. Notably, the 20-year high-quality inventory is a competitive advantage.

ARC commits to growing the dividend in line with the business’s profitability. Thus far, the large-cap stock has increased its base dividend for five consecutive years. Management expects the Board-approved capital budget of $1.8 to $1.9 billion in 2026 to generate approximately $1.5 billion of free funds flow.

Resilience and income stability

The TSX faces formidable obstacles to duplicate its 2025 performance. Still, investors can turn to Bird Construction and ARC Resources for resilience and income stability in 2026.

The post The TSX Could Extend Its Bull Run in 2026 (Minus 3 Factors) appeared first on The Motley Fool Canada.

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More reading

• Got $3,000 for a TFSA? 3 Reliable Canadian Stocks for Long-Term Wealth Building
• A Canadian Energy Stock Poised for Major Growth in 2026
• Still Under $30, These Wealth-Builders May Not Stay Cheap for Long
• 3 TSX Stocks Under $50 That Could Skyrocket
• Dividend Investors: 3 Canadian Energy Stocks Look Like Buys Right Now

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.