Canada’s financial sector now accounts for 37% of the Toronto Stock Exchange (TSX) benchmark index, the highest proportion recorded in the past eight years. The six dominant Canadian banks—Royal Bank of Canada (RY), Toronto‑Dominion Bank (TD), Bank of Montreal (BMO), Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce (CM) and National Bank of Canada (NA)—have delivered multiple quarters of double‑digit earnings growth and are trading at valuations that approach multi‑decade highs, prompting questions about the sustainability of earnings relative to these elevated multiples. Michael Dehal, senior portfolio manager at Dehal Investment Partners, expressed concern that if earnings fail to keep pace with the high price‑to‑earnings multiples, a price correction could occur and weigh on the broader TSX performance. Since the United States’ February attack on Iran, Canadian financial stocks have outperformed other sectors, gaining 22% while energy stocks rose 7% and materials stocks fell 25% (with recent mining recovery). This sector‑driven rally has contributed to the TSX’s outperformance of the S&P 500 in 2025 and the current calendar year, offering investors an alternative to the technology‑heavy U.S. indices. However, the concentration of 37% in financial stocks reduces diversification benefits for investors holding broad‑based index positions and heightens exposure to potential declines in the banking sector. The article also notes that gold prices slipped 0.06% and Brent crude rose 3.56%, contextualising the broader commodity backdrop influencing sector dynamics.