Canadian Stocks Dip Amid Profit-Taking

Image Source : Krish Capital Pty Ltd

Index Update:  After opening slightly lower than the previous close, the benchmark S&P/TSX Composite Index stayed in negative territory and finally closed at 27,915.99, down by 77.44 points (or 0.28%).

Macro Update:  Days before, as a retaliatory action for Canada's imposition of 100% tariff on Chinese vehicles, China slapped Canada with nearly 76% tariff on Canadian canola imports into China. The levy is set to come into force today. On the monetary front, the yield on Canada's two-year bonds rose to 2.71% today, marking a 0.03% increase from previous session. In the US, headline and core PPI (which excludes food and energy) each rose 0.9% in July, the largest monthly gains in three years, signaling rising business costs.

Top Movers:  Among the individual stocks, Bausch Health Companies Inc (5.17%), BCE Inc (1.45%), Gildan Activewear Inc (2.82%), and Great West Lifeco Inc (1.53%) were the prominent gainers.

Our Stance:  The index is currently testing a critical support zone near 27,700; holding above this level is essential to preserving the upward trajectory. A decisive break below 27,700 could spark a retracement toward the next support area between 27,500 and 27,300. Sustaining these levels will be vital to keeping the near-term bullish outlook intact.

Commodity Update:  The dollar held steady on Friday after stronger-than-expected U.S. inflation data led traders to scale back expectations for a rate cut from the Federal Reserve. Gold rose 0.22% to $3,392.20, silver inched up 0.01% to $38.07, and copper gained 0.22% to $9,788.00. Brent crude slipped 0.10% to $66.79 after prior gains, with focus on the upcoming U.S.-Russia meeting and its potential impact on global supply.

Technical Update:

The S&P/TSX Composite Index fell 77.44 points on Thursday to close at 27,915.99, marking a 0.28% decline. Technology stocks led the losses, sliding 2.73% in the session. Despite the pullback, the index maintains a technically strong posture, remaining above its 50-period Simple Moving Average (SMA), a key support for the broader bullish trend. The Relative Strength Index (RSI) reads 64.56, reflecting healthy market momentum. The index is currently testing a critical support zone near 27,700; holding above this level is essential to preserving the upward trajectory. A decisive break below 27,700 could spark a retracement toward the next support area between 27,500 and 27,300. Sustaining these levels will be vital to keeping the near-term bullish outlook intact.