Canadian Stocks Close Modestly Higher

                                                       Source: Krish Capital Pty Ltd

Index Update:

Canadian stocks gained a little on Tuesday as investor sentiment were weighed down by the consequences of a potential U.S. government shutdown.

After opening a little lower than yesterday's record high, the benchmark S&P/TSX Composite Index hit a new all-time intraday high of 30,049.81. The index subsequently turned lower before rebounding late in the session to close at 30,022.81, up by 50.90 points (or 0.17%).

Macro Update:

Concerns about the aftereffects of a U.S. shutdown at midnight compelled investors to take measured steps as the U.S. remains the anchor of global markets.

To prevent the U.S. government from running out of federal funds, a short-term spending bill needs to be approved by the Congress. However, hectic talks between Republicans and Democrats to avert the halting of critical activities have thus far failed, as both sides stick to their demands. Shutdowns in the past have been avoided through a last-minute deal.

Yesterday, Trump imposed additional tariffs on imports of softwood lumber and timber (10%), kitchen cabinets and vanities (25%), and upholstered wooden products (25%). These tariffs likely come into effect from October 14.

Notably, Canada is the biggest softwood lumber supplier to the U.S.

Top Movers:

Among the individual stocks, Aecon Group Inc (2.63%), Stella Jones Inc (4.10%), Novagold Res Inc (4.06%), New Gold Inc (3.42%), and Aya Gold and Silver Inc (3.07%) were the prominent gainers.

Our Stance:

The index is currently consolidating near a key support zone around 29,800. Maintaining this level will be crucial for sustaining market confidence and a broader uptrend. A decisive break below, however, could signal short-term bullish exhaustion, potentially leading to a pullback toward 29,600 and 29,400.

Commodity Update:

The U.S. dollar steadied on Wednesday after a Republican bill to extend government funding for seven weeks failed in the Senate, raising the risk of a shutdown from midnight. Gold climbed 0.40% to $3,889.05, silver advanced 1.79% to $47.48, while copper slipped 0.08% to $10,279.80. Brent crude rose 0.20% to $66.15, supported by a draw in U.S. inventories after sharp losses on renewed OPEC+ output concerns.

Technical Update:

On Tuesday, the S&P/TSX Composite Index rose 50.90 points (0.17%) to close at 30,022.81. The modest gain was supported by strong trading volumes, reflecting sustained investor confidence and reinforcing the prevailing bullish momentum. Technically, the index remains in a solid uptrend, trading well above its 21-period SMA, which continues to act as dynamic support. Momentum indicators are strong, with the RSI at 76.91, signaling persistent buying pressure. The index is currently consolidating near a key support zone around 29,800. Maintaining this level will be crucial for sustaining market confidence and a broader uptrend. A decisive break below, however, could signal short-term bullish exhaustion, potentially leading to a pullback toward 29,600 and 29,400.