Canadian Market Retreats as Investors Stay Guarded

Image Source : Krish Capital Pty Ltd

Index Update:  The S&P/TSX Composite Index fell 0.35% to below 27,823.88 on Tuesday as investors weighed softer than expected inflation data and new geopolitical developments. The Bank of Canada’s preferred inflation gauge, the CPI Trimmed-Mean, held at 3.0% in July against expectations of 3.1%, tilting market expectations toward a more accommodative policy stance.

Macro Update:  US–China Tariff Talks Show Progress: Treasury Secretary Scott Bessent said talks with China were “very good” as both sides explore a deal during the 90-day tariff truce. He noted China remains the biggest revenue source for tariff income and signaled more meetings before November.

US Widens Metal Tariffs:  Washington extended its 50% steel and aluminum tariffs to 407 more product categories, including auto parts, chemicals, and plastics. Officials said the move aims to stop circumvention and bolster domestic industries.

Top Movers and Losers:  The best performers of the session on the S&P/TSX Composite were TFI International Inc (TSX: TFII), which rose 3.36%. Meanwhile, TerraVest Industries Inc (TSX: TVK) added 2.78% and Jamieson Wellness Inc (TSX: JWEL) was up 2.58%. The worst performers of the session were Energy Fuels Inc. (TSX: EFR), which fell 17.50%. Aya Gold & Silver Inc (TSX: AYA) declined 6.70% and NexGen Energy Ltd. (TSX: NXE) was down 6.60%.

Our Stance:  The index continues to trade above its 21-period Simple Moving Average (SMA), a signal that the broader bullish trend remains intact. The Relative Strength Index (RSI) stands at 60.46, indicating a balanced momentum backdrop. Currently, the index is testing a key support level near 27,600. Holding this threshold will be critical to preserving upward momentum and could set the stage for a renewed rally.

Commodity Update:  The U.S. dollar strengthened for a third straight session on Wednesday ahead of the Federal Reserve’s Jackson Hole symposium, where traders await policy cues. Gold eased 0.07% to $3,356.10, silver slipped 0.42% to $37.17, while copper inched up 0.02% to $9,699.15. Brent crude rose 0.21% to $65.93 amid resurfacing supply concerns, as prolonged Russia-Ukraine peace talks keep sanctions intact and raise risks of further restrictions.

Technical Update:  On Tuesday, the S&P/TSX Composite Index closed at 27,823.88, posting a modest decline of 0.35%. The pullback was largely driven by weakness in the healthcare sector, which fell 2.12%. Despite this downturn, the index continues to trade above its 21-period Simple Moving Average (SMA), a signal that the broader bullish trend remains intact. The Relative Strength Index (RSI) stands at 60.46, indicating a balanced momentum backdrop. Currently, the index is testing a key support level near 27,600. Holding this threshold will be critical to preserving upward momentum and could set the stage for a renewed rally. Conversely, a decisive break below this zone may open the door to further downside, with the next important support levels seen in the 27,400–27,200 range.