Canadian equities closed modestly lower on Thursday

Index Update:

Canadian equities closed modestly lower on Thursday as declining crude oil prices, following the reopening of the Strait of Hormuz, pressured the energy sector. At the same time, a sharp drop in gold prices, driven by expectations of higher U.S. interest rates, weighed on metal and mining stocks, collectively dragging the broader market lower.

After opening higher than yesterday's close, today the benchmark S&P/TSX Composite Index lost momentum early in the session and traded firmly negative throughout the rest of the day before settling at 34,969.26, down by 155.85 points (or 0.44%).

Macro Update:

The interest rate projections by the Fed's monetary policy officials hinted at possible rate hikes in 2026. The prospects of a high-interest regime in the near-term weighed on gold prices.

Canadian investors are now focusing on the ongoing talks between Canada and the U.S. regarding the renewal of the Canada-United States-Mexico Agreement (or CUSMA) free-trade pact.

Data released by Statistics Canada revealed that producer prices increased 1.20% month-over-month in May, below a downwardly revised 1.60% in April and forecasts of 1.8%. This is the fifth consecutive monthly increase. On a year-on-year basis, prices soared 13.60%.

Top Movers:

Among the individual stocks, Curaleaf Holdings Inc (5.88%), Chartwell Retirement Residences (2.04%), Toromont Ind (17.14%), Badger Infrastructure Solutions Ltd (4.67%), and Air Canada (4.63%) were the prominent gainers.

Our Stance:

The immediate support is located around the 34,800 level, and as long as the index holds above this zone, the broader bullish structure is expected to remain intact. A sustained move higher from current levels could attract renewed buying interest and support additional gains in the near term.

Commodity Update:

The U.S. dollar index climbed to a one-year high on Friday after the Federal Reserve’s hawkish stance strengthened expectations of additional interest rate increases this year. In the commodities market, gold declined by 1.23% to USD 4,194.20, silver dropped 2.48% to USD 64.66, and copper eased 0.59% to USD 13,621.00. Meanwhile, Brent crude oil fell 1.10% to USD 79.01 amid easing supply concerns following progress in U.S.-Iran peace discussions and the reopening of the Strait of Hormuz.

Technical Update:

The S&P/TSX Composite Index declined 155.85 points, or 0.44%, on Thursday to close at 34,969.26, reflecting a modest pullback following recent gains. Despite the weakness in the latest session, the broader technical outlook remains constructive. The index continues to trade comfortably above its 21-day Simple Moving Average (SMA), which serves as a key dynamic support level and reinforces the prevailing bullish trend. Momentum indicators remain favourable, with the 14-day Relative Strength Index (RSI) near 55.31, suggesting healthy buying interest while remaining below overbought territory, leaving scope for further upside. Immediate support is located around the 34,800 level, and as long as the index holds above this zone, the broader bullish structure is expected to remain intact. A sustained move higher from current levels could attract renewed buying interest and support additional gains in the near term.