Canadian stocks moved sharply lower during trading on Monday

Image Source : Krish Capital Pty Ltd

Index Update: Canadian stocks showed another significant move to the downside during trading on Monday. The benchmark S&P/TSX Composite Index recovered from an early plunge and briefly turned positive but ended the day down 334.01 points or 1.4 percent at 22,859.46.

Macro Update: Adding to worries about a global trade war, Trump threatened to impose an additional 50 percent tariff on Chinese goods unless the country withdraws its new 34 percent tariff on U.S. goods

The yield on the Canadian 10-year government bond has surged above 3%, rebounding sharply from a near two-year low of 2.83% recorded in early March, as investors demand a higher risk premium amid shifting global risk assessments and mounting domestic challenges.

Top Losers: Energy and mining stocks were hit particularly hard, with major players such as Canadian Natural and Imperial Oil shedding 3.6% and 2.7%, respectively, while financial and mining giants like RBC, TD Bank, BMO, and Scotiabank also recorded significant declines of 1.1% to 4.6%.

Our Stance: the index continues to trade below its 21-period Simple Moving Average (SMA), reflecting persistent downward momentum and ongoing selling pressure. A crucial support level lies at 22,500, a major horizontal trendline that could serve as a potential floor for price stabilization. If this level holds, it may provide a base for consolidation or a technical rebound. However, a confirmed breakdown below 22,500 could accelerate the decline, with the next key downside targets seen at 22,000 and 21,600.

Commodity Update: On Tuesday, the U.S. dollar weakened as markets reacted to growing recession fears following President Trump’s sweeping tariffs. Gold rose 1.32% to $3,012.90, silver climbed 1.57% to $30.07, and copper edged up 0.54% to $8,796.00. Brent crude ticked up 0.11% to $64.93, slightly recovering from recent lows. Oil prices had recently hit a four-year low amid concerns over waning demand, with Trump’s new tariffs on key economies set to begin Wednesday.

Technical Update: On Monday, the S&P/TSX Composite Index plunged 334.01 points (-1.44%), closing at 22,859.46, as a sharp 2.41% decline in the healthcare sector weighed heavily on overall market sentiment. This significant sector drop amplified the bearish tone across the index. Technically, the index continues to trade below its 21-period Simple Moving Average (SMA), reflecting persistent downward momentum and ongoing selling pressure. The Relative Strength Index (RSI) has fallen to 27.48, nearing oversold territory. While this suggests the potential for a short-term relief bounce, the broader trend remains cautious. A crucial support level lies at 22,500, a major horizontal trendline that could serve as a potential floor for price stabilization. If this level holds, it may provide a base for consolidation or a technical rebound. However, a confirmed breakdown below 22,500 could accelerate the decline, with the next key downside targets seen at 22,000 and 21,600.