The Canadian market closed on a firm note on Wednesday

Image Source : Krish Capital Pty Ltd

Index Update: The benchmark S&P/TSX Composite Index settled with a gain of 290.49 points or 1.15% at 25,569.84, rising for the second consecutive day following the U.S. President Donald Trump agreeing to hold off tariffs against Canadian imports by a month.

Macro Update:In economic news, the S&P Global Canada Composite PMI improved to 49.5 in January 2025, up from 49.0 in December. The S&P Global Canada Services PMI recorded 49.0 in January 2025, slightly up from 48.2 in December 2024.

Canada posted a trade surplus of C$0.7 billion in December of 2024, after recording an upwardly revised deficit of C$1 billion in November. Exports of goods jumped by 4.9% from the previous month to C$69.5 billion, while imports rose by 2.3% to a record high of $68.8 billion.

Top Movers: Mattr Corp (MATR.TO), Transcontinental (TII.TO), New Gold (NG.TO), Hudbay Minerals (HBM.TO), Bombardier Inc (BBD.B.TO), MEG Energy (MEG.TO), Crescent Point Energy (CPG.TO), Oceanagold (OGC.TO), Real Matters (REAL.TO) and Precision Drilling (PD.TO) moved up 3 to 4%.

Our Stance: From a technical standpoint, the index's technical outlook remains positive, as it holds well above its 21-period Simple Moving Average (SMA), maintaining its bullish momentum. At present, the index is testing a critical support level around 25,200. Holding above this threshold is essential for the continuation of the bullish trend. A drop below this level could trigger a correction, with the next support zones at 25,000 and 24,800.

Commodity Update: The U.S. dollar fell to an eight-week low against the yen and hovered near a one-month low against the pound as investor fears about a global trade war subsided. Japan's yen gained momentum, supported by rising expectations of further interest rate hikes by the Bank of Japan following strong wage data and a central bank official’s comment. In commodities, gold dropped 0.19% to $2,888.20, silver fell 0.61% to $32.77, while copper rose 0.75% to $9,335.20. Brent crude rose 0.19% to $74.55, recovering from a previous sell-off after Saudi Arabia raised March oil prices significantly. Investors await U.S. Non-Farm Payroll data for clearer insights on future rate decision.

Technical Update: On Wednesday, the S&P/TSX Composite Index gained 290.49 points, closing at 25,569.84, reflecting a 1.15% increase. This uptick indicates continued investor confidence and market participation, particularly in the technology sector, which rose by 2.91%. The index's technical outlook remains positive, as it holds well above its 21-period Simple Moving Average (SMA), maintaining its bullish momentum. The Relative Strength Index (RSI) is currently at 58.28, suggesting the market is in a healthy zone but nearing overbought levels, which could signal the potential for a short-term pullback. That said, the current RSI still points to the possibility of further upside, assuming the buying momentum persists. At present, the index is testing a critical support level around 25,200. Holding above this threshold is essential for the continuation of the bullish trend. A drop below this level could trigger a correction, with the next support zones at 25,000 and 24,800. Monitoring these key levels will be important to assess the market’s resilience and avoid further downward pressure. While the outlook remains positive, traders should remain vigilant for signs of potential volatility.