The TSX composite closed at a record 36,957.63 on Tuesday, up 243.51 points or 0.66%, its all-time high. Financials and materials did the work. Energy did not participate, and that split, not the headline record, is the more useful signal for a portfolio built with meaningful Canadian bank and energy weight.
The Number Behind the Record
Scotiabank kicked off Big Six earnings week with a record quarter, posting adjusted diluted earnings per share of $2.28, up from $1.88 a year earlier, and adjusted return on equity of 14.2%, above the bank's own 14% target. CEO Scott Thomson told analysts the bank does not see 14% ROE as a ceiling. The stock responded immediately, rallying 7.02% to an all-time high of $128.73.
BMO reported the same morning, with capital markets net income surging 45 to 46% and overall earnings growth of 22%. The bank announced a new buyback of up to 25 million shares, roughly 3.6% of float, starting in September, alongside a 5% dividend increase to $1.71 per share. Both banks delivered strong trading desk results, a signal that capital markets activity, not just domestic lending margins, is driving this earnings cycle.
What Did Not Participate
Energy moved in the opposite direction on the same session. Imperial Oil fell 4.20% to $181.84, Cenovus dropped 3.97% to $42.80, and Canadian Natural and Suncor each lost more than 1%. The driver was WTI crude falling to $80.98, down 4.74% and its third straight declining session, as markets read this week's Iran sanctions as less severe than feared alongside progress on a Strait of Hormuz shipping corridor.
Energy represents roughly 12% of the TSX composite by weight. A record index close that excludes a sector at that weight is not a broad-based rally, it is a composition effect: financials and materials, both of which gained on Tuesday, carried enough index weight to outweigh energy's decline. Miners specifically benefited from higher gold prices, with gold trading near $4,650 an ounce on the ongoing debasement trade.
What the Rest of Earnings Week Tests
National Bank reports Wednesday. RBC, TD, and CIBC report Thursday. Consensus EPS revisions over the past 12 months have been positive across all six banks, with CIBC leading at plus 12.1% and RBC at plus 9.8%, and every bank enters this window on a four-quarter beat streak. Whether Tuesday's financials-led strength extends through the rest of the week determines whether this record close was the start of a sustained sector rotation into financials or a single-day reaction to two strong prints.
The immediate read for a portfolio with standard Canadian bank exposure is straightforward: Tuesday's move added real value, and the setup for the remaining reports is favourable given the beat streak. The read for concentrated energy exposure is separate and less favourable, tied not to the banks at all but to whether this week's Iran sanctions and Hormuz diplomacy hold or reverse.
Tuesday's record close was carried entirely by financials and materials. Energy, roughly 12% of the index by weight, moved in the opposite direction as WTI fell for a third straight session.