S&P/TSX Energy Index Rallies 16% in July, Tops Canadian Sectors

• Oil & Gas led performance with large-cap gaining 12% and mid-cap up 7%, while clean technology and renewable energy fell 6% in large-cap and small-cap segments
• Canadian-listed ETFs attracted CAD 18.2 billion in net capital including CAD 12.5 billion into equity ETFs, driven primarily by broad-market and international equity funds
• Canadian Natural Resources was the most actively traded large-cap stock with 257.6 million shares, followed by TELUS Corporation with 207.4 million shares

Summary: S&P/TSX Energy Index Rallies 16% in July, Tops Canadian Sectors

The S&P/TSX Energy Index surged 16% in July, making it the top-performing sector in an otherwise subdued Canadian equity market. Oil & Gas led gains in both large-cap (+12%) and mid-cap (+7%) segments, providing the clearest source of strength during the month.

Paradoxical Outflows:

Despite the energy sector's strong performance, Canadian energy equity ETFs experienced CAD 244 million in net outflows, suggesting investor caution or profit-taking even amid positive returns.

Sector Performance Divergence:

Performance was highly concentrated, with significant variation across sectors:

• Clean technology and renewable energy stocks declined 6% in large-cap and small-cap segments, with micro-cap companies falling 9%
• Technology struggled, with large-cap tech down 4% and micro-cap tech plunging 14%

Overall ETF Market:

Canadian-listed ETFs attracted CAD 18.2 billion in net new capital for July, including CAD 12.5 billion flowing into equity ETFs. The energy outflows represented a small portion relative to overall market activity, with broad-market and international equity funds capturing most investor demand.

Trading Activity:

Canadian Natural Resources (CNQ) led large-cap trading volume with 257.6 million shares, followed by TELUS Corporation with 207.4 million shares.

Market Implications:

The results indicate narrow market leadership rather than broad-based gains across Canadian equities. Investors demonstrated clear preferences for specific industries and companies, particularly those offering liquidity, commodity exposure, or sector-specific catalysts. The disconnect between energy sector performance and ETF flows suggests selective positioning despite strong returns.