04:29 PM EST, 12/18/2025 (MT Newswires) -- The Toronto Stock Exchange closed higher on Thursday for the first time in five sessions, largely on some bargain buying after the index lost a total of more than 400 points over the four days that immediately followed last Thursday's record close.

The resources-heavy S&P/TSX Composite Index closed up 190.83 points, or 0.6%, to 31,440.83, even with Health Care emerging as the biggest mover and loser among sectors. It was down near 10%, despite President Trump's move to reschedule cannabis from a Schedule I to Schedule III substance under the Controlled Substances Act. Most sectors were higher, although Base Metals was the only one to rise by at least 1%, even though gold prices edged off a day-prior record high.

Investor sentiment was not helped by commentary around uncertainty on the economic outlook for 2026, and on mixed commodity prices.

Among cannabis stocks, Tilray Brands, Inc. ( TLRY ) fell 4.9% even as it confirmed Thursday afternoon its planned strategic framework to advance its U.S. medical cannabis operations following federal cannabis rescheduling and related regulatory developments. In conjunction with these regulatory changes, Tilray announced the formation of Tilray Medical USA.

Cannabis stocks had rallied of late on the prospect of a U.S. move to reclassify marijuana.

On the economy, Desjardins published a 2026 outlook note in which it talks about "navigating land mines". The Desjardins takeaway is that the next 12 months "could end up playing out in very dramatic fashion...or it might not".

It said: "Questions about the scale and speed of investment in artificial intelligence continue to mount, while bond vigilantes hover like watchful sentinels, monitoring government deficits and nudging investors to rethink asset allocation. Global growth looks positive but fragile, challenged by policy shifts in the U.S. that could ripple across markets. Trade policy looms large -- the CUSMA review in particular could reshape how businesses operate across North America. While there is a path to navigating these landmines without a major shock, it is far from a certainty."

RBC Assistant Chief Economist Cynthia Leach said federal government planned spending is "lagging", although it should start to accelerate. She noted even though the budget implementation bill will not pass before the end of January, it is paused now that the House of Commons has risen for the holiday break, at least half of $29 billion in 'new' budget measures already have spending authority from early summer. Also, she noted, though higher capital spending is a core budget theme, the majority of planned 2025-26 spending is operational, including for defense, suggesting a potentially easier path to deployment once spending is authorized. "Still," Leach said. "it's looking unlikely that all planned spending can be unleashed in year. Also, any spending ramp up in fiscal 2025-26 is unlikely to be material in calendar 2025, making it part of the 2026 story."

Besides possible spending delays from 2025-26 plans, spending from 2026-27 and later years could also be backed up given the higher capital and defense share, Leach said. "Combined with execution risk on the operational savings side, where later-stage departmental cuts may be harder won, and it means risk that future deficits are larger. Although some delayed spending may not materialize," she added..

Leach said: There is excess capacity in the economy in the near-term to absorb some fiscal stimulus. However, recent data also suggest the output gap is lower than previously assumed. Our outlook expects a strengthening Canadian economy through 2026 and progressive closing of the output gap. Delayed spending could thus arrive when the Canadian economy is already much stronger."

Leach added: "Given uncertainty around federal deficits levels and timing, we've not made any changes to our 'fiscal add' to GDP in our outlook, which already included 0.4 percentage points to growth over 2025 and 2026."

Of commodities, West Texas Intermediate crude oil rose for a second straight session Thursday as geopolitical risks continue to dominate sentiment amid U.S. threats to Venezuela, offsetting the over supply concerns that pushed prices to near five year lows earlier this week. West Texas Intermediate crude oil for January delivery closed up $0.21 to settle at US$56.15 per barrel, while February Brent oil was last seen up $0.16 to US$59.84.

But gold had edged down from a record high by late afternoon Thursday after the dollar and treasury yields weakened as the United States released incomplete data showing inflation slowed in November. Gold for February delivery was last seen down US$9.40 to US$4,364.60 per ounce.