Canadian Stocks Climbed to Record Highs

Index Update:  Canadian stocks jumped on Wednesday, continuing their rally after three consecutive bullish sessions, as investor confidence increases following reports indicating that Kevin Hassett, who favors lowering interest rates, may become the next U.S. Federal Reserve Chair. After opening a little above yesterday's close, the benchmark S&P/TSX Composite Index traded firmly positively throughout the session before settling at a new record closing high of 31,180.25, up by 279.60 points (or +0.90%).

Macro Update:  Despite remarks by Fed officials in recent weeks indicating a divergence of views on the need for another rate cut, since Monday three Fed officials have reiterated their preference for lower rates. On the geopolitical front, the U.S. has come up with a 10-point peace plan to end the Russia-Ukraine war. The draft has been formally accepted by Ukraine's President Volodymyr Zelenskyy. On the domestic front, Canadian Prime Minister Mark Carney is planning to infuse $500 million in loan guarantees for the Canadian softwood lumber industry and restrict foreign steel imports. In addition, steel imports from countries without a Free Trade Agreement with Canada would be minimized to allow Canadian steel manufacturers to gain some leverage.

Top Movers:  Among the individual stocks, Aya Gold and Silver Inc (13.47%), Endeavor Silver Corp (9.79%), Discovery Silver Corp (8.79%), First Majestic Silver Corp (8.52%), Aecon Group Inc (2.91%), and Boyd Group Services Inc (2.82%) were the prominent gainers.

Our Stance:  Currently, the index consolidates near an important support area around 31,100. Maintaining levels above this zone will be crucial to preserving positive sentiment and sustaining a broader uptrend. Conversely, a decisive move below this support could indicate fading momentum and pave the way for a potential pullback toward 30,800 and 30,700. 

Commodity Update:  The dollar weakened on Thursday in thin holiday trade as markets looked ahead to 2025, with multiple U.S. rate cuts already priced in. Gold slipped 0.56% to USD 4,178.70, silver eased 0.29% to USD 52.76, and copper dipped 0.17% to USD 10,946. Brent crude fell 0.30% to USD 62.92 on optimism around a possible Ukraine-Russia ceasefire that could eventually ease sanctions on Russian supply.

Technical Update:

On Wednesday, the S&P/TSX Composite Index advanced 279.60 points, or 0.90%, to close at 31,180.25. The rise was supported by strong trading volumes, signaling firm investor confidence and reinforcing the prevailing bullish momentum. From a technical perspective, the index continues to trend higher, holding comfortably above its 21-period Simple Moving Average (SMA), which remains a key dynamic support level. Momentum conditions also appear favorable, with the 14-period Relative Strength Index (RSI) at 63.56, reflecting steady buying pressure. Currently, the index consolidates near an important support area around 31,100. Maintaining levels above this zone will be crucial to preserving positive sentiment and sustaining a broader uptrend. Conversely, a decisive move below this support could indicate fading momentum and pave the way for a potential pullback toward 30,800 and 30,700.