The purpose of this study was to determine whether a small group of factors could be identified to explain the behavior of the Toronto Stock Exchange's composite index. It was found that two factors, the Monetary Conditions Index and consumer sentiment, together have nearly 69% explaining power to determine the position of the market on a quarterly basis. The Monetary Conditions Index, as expected, had a negative impact on the TSE, while consumer sentiment had a very strongly positive impact on the stock index.

Future research may seek to determine whether other factors not identified or tested here may have an impact on the TSE-300. It would also be instructive to study whether the factors that influence the TSE-300 are the same factors that influence the NASDAQ or NYSE. Further, better access to Canadian data would allow this study to be completed in better detail.

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