The Canadian stock market ended flat on Friday

Image Source : Krish Capital Pty Ltd

Index Update:  The Canadian stock market ended flat on Friday, amid uncertainty on US-Canada trade deal even as July 9 deadline set by the US President for tariff agreement is fast approaching. The benchmark S&P/TSX Composite Index opened slightly down and dropped further but recovered to reach a new record high at 27,076.75 past noon. The index eventually ended the session with a small gain of 1.90 points or 0.01% at 27,036.16. The benchmark gained about 1.3% in the week.

Macro Update:  Data released by S&P Global revealed that the Canada Composite PMI fell to 44.0 in June from 45.5 in May, indicating seventh consecutive monthly contraction in private sector businesses. Both the manufacturing (45.6 versus 46.1) and services (44.3 versus 45.6) sectors posted similar levels of contraction.

Top Movers:  H&R Real Estate (17.22%), Allied Properties (3.81%), Premium Brands Holdings (1.81%), and Cogeco Communications (1.17%) were the prominent gainers.

Our Stance:  At present, the index is testing a critical support level near 26,700. Sustaining this level will be crucial for preserving the prevailing upward momentum. If the index holds above this threshold, it could provide a solid foundation for a renewed rally. However, a decisive break below this support zone may trigger additional downside pressure, potentially leading to a pullback toward the next significant support area in the 26,400–26,200 range.

Commodity Update:  The U.S. dollar stayed near its lowest since 2021 versus the euro and its weakest since 2015 against the Swiss franc on Monday, as markets awaited trade headlines ahead of President Donald Trump's tariff deadline. Gold fell $0.82% to $3,319.10, silver slipped 0.37% to $36.99, copper declined 0.37% to $9,830.45, and Brent crude dropped 1.11% to $67.50 amid OPEC+ output hike concerns.

Technical Update:  On Friday, the S&P/TSX Composite Index closed at 27,036.16, registering a modest gain of 0.01%. The upturn was primarily driven by strength in the real estate sector, which posted a notable gain of 1.66%.  The index continues to trade above its 21-period Simple Moving Average (SMA), suggesting that the longer-term bullish trend remains intact. This technical indicator serves as a key gauge of market momentum, and its continued support reinforces the potential for further upside. The Relative Strength Index (RSI) currently stands at 72.61, indicating that the market is approaching overbought conditions, yet still reflects resilient bullish sentiment. At present, the index is testing a critical support level near 26,700. Sustaining this level will be crucial for preserving the prevailing upward momentum. If the index holds above this threshold, it could provide a solid foundation for a renewed rally. However, a decisive break below this support zone may trigger additional downside pressure, potentially leading to a pullback toward the next significant support area in the 26,400–26,200 range.