BMO Economics in its overnight 'AM Charts' note, noted the TSX pushed above pre-COVID levels for the first time last week (to record territory), and continues to trade near the 18,000 level.
BMO noted that it took Canadian stocks almost 11 months to reclaim late February 2020 levels, or roughly twice as long as the S&P 500. The bank said: "As we've discussed previously, part of this reflects the fact that Canada doesn't carry a lot of weight in sectors that were really working early in the pandemic-big technology and consumer discretionary."
In addition, BMO noted that while the TSX was trailing the S&P 500 by roughly 12 ppts versus a year ago, performance over the past three months has been "almost perfectly in line." According to BMO, this reflects "better momentum" in two heavyweight (for Canada) sectors. It noted Banks have benefited from vaccine optimism and a steeper yield curve. At the same time, it also noted, a rally in oil prices has lifted Energy stocks again. BMO added: "The reality is that the TSX really can't sustain any kind of momentum unless these two sectors are working -- and they are doing so right now."