Canadian Market Recovers After Weak Start

Image Source : Krish Capital Pty Ltd

Index Update: After opening with a negative gap and falling further in early trades, the Canadian market emerged into positive territory on Monday, led by gains in consumer staples, energy, communications and consumer discretionary sectors. The benchmark S&P/TSX Composite Index, which tumbled to 24,534.35, losing about 225 points, was up 56.47 points or 0.23% at 24,815.62 at noon.

Macro Update: The yield on the US 10-year Treasury note hovered around 4.2% on Tuesday after falling for two consecutive sessions, as President Donald Trump's trade escalations clouded the economic outlook, boosting demand for safe haven assets.

Top Movers: Molson Coors Canada, Empire Company, Cogeco, Loblaw Companies, Metro Inc., George Weston, Intact Financial Corporation, Cogeco Communications, RB Global, Imperial Oil, Great-West Lifeco and ATCO are up 2 to 3%.

Our Stance: The index remains in a favorable position, trading comfortably above its 21-period Simple Moving Average (SMA), reinforcing the bullish trend. Currently, the index is testing a key support level around 24,700. Holding above this mark could pave the way for continued growth, while a drop below may introduce retracement risks, with critical support zones between 24,400 and 24,200.

Commodity Update: The dollar remained steady on Tuesday after a tough quarter as investors awaited U.S. President Donald Trump’s announcement of reciprocal tariffs, which was expected Wednesday with limited details. Trump hinted that nearly all countries would face new duties. In commodities, gold rose 0.72% to $3,172.90, silver gained 0.84% to $34.90, and copper surged 0.51% to $9,758.50. Brent oil held at $74.75 per barrel amid heightened geopolitical tensions after Trump’s threat to bomb Iran and potential sanctions on Russia’s oil industry if Russia-Ukraine peace talks falter.

Technical Update: On Monday, the S&P/TSX Composite Index posted modest but encouraging gains, rising 158.35 points to close at 24,917.50, a 0.64% increase. Strong trading volumes underscored investor confidence, with the energy sector leading the rally, climbing 1.23% amid growing market optimism. From a technical standpoint, the index remains in a favorable position, trading comfortably above its 21-period Simple Moving Average (SMA), reinforcing the bullish trend. The Relative Strength Index (RSI) sits at 48.75, indicating potential for further upside without signaling overbought conditions. Currently, the index is testing a key support level around 24,700. Holding above this mark could pave the way for continued growth, while a drop below may introduce retracement risks, with critical support zones between 24,400 and 24,200. Sustaining levels above these thresholds will be crucial for maintaining bullish momentum and unlocking additional gains in the near term.