Canadian Stocks Edge Lower

index Update:

Canadian stocks moved in a volatile manner on Tuesday, ultimately closing slightly lower as investors reacted to U.S. President Donald Trump’s decision to pause a planned military strike on Iran, while warning that military action could still follow if Tehran fails to reach an agreement.

The benchmark S&P/TSX Composite Index bounced back and forth across the unchanged line as the day progressed before settling at 33,741.24, down by 92.11 points (or 0.27%).

Macro Update:

In a significant development in the U.S.-Iran conflict, Trump announced yesterday through his Social Media platform Truth Social that he halted his planned strikes on Iran scheduled for today at the request of the leaders of Qatar, Saudi Arabia, and the United Arab Emirates, who have assured him that the ongoing negotiations would Yield a favorable outcome.

On the domestic economy, data from Statistics Canada revealed that on an year-on-year basis, the Inflation rate rose to 2.80% in April from 2.40% in the previous month (highest in two years) though below market expectations of 3.10%.

On a month-on-month basis, consumer prices increased 0.4% from a month earlier in April, below market expectations of 0.7%.

The annual Core Inflation rate, (which excludes eight of the most volatile components) eased to 2.1% in April from 2.5% in the prior month. On a month-on-month basis, core prices rose by 0.2% in April.

The next announcement on interest rates by the Bank of Canada is slated for June 10. Economists expect the Central Bank to hold its policy rate at 2.25%.

Top Movers:

Among the individual stocks, Aya Gold and Silver Inc (14.51%), Americas Gold and Silver Corporation (13.28%), Perpetua Resources Corp (12.49%), and Silvercorp Metals Inc (9.38%) were the notable losers.

Our Stance:

The immediate support is seen around the 33,600 level, and maintaining this threshold could help stabilize market sentiment while preserving the broader consolidation pattern. However, a sustained move below 33,600 may invite further selling pressure, potentially dragging the index toward the 33,400 level in the near term. On the upside, a clear breakout above the 33,750 resistance level would reinforce bullish momentum and could pave the way for a move toward the 34,000 mark.

Commodity Update:  

The U.S. dollar held near a six-week high on Wednesday as investors assessed the possibility of prolonged higher interest rates to contain inflation pressures linked to the Iran conflict, while the Japanese yen remained close to intervention-sensitive levels. Gold declined 0.51% to USD 4,462.40 per ounce, silver slipped 0.17% to USD 73.90, and copper eased 0.25% to USD 13,391.00. Brent Crude fell 0.40% to USD 110.83 per barrel after President Donald Trump said the Iran war could end “very quickly,” though Supply disruption concerns continued to support caution.

Technical Update:

S&P/TSX Composite Index declined 92.11 points, or 0.27%, on Tuesday to close at 33,741.24. Despite the pullback, the index continues to trade below its 21-day Simple Moving Average (SMA), which is acting as a reliable dynamic resistance and limiting near-term upside momentum. The 14-day Relative Strength Index (RSI) stands at 49.17, indicating neutral momentum with a slight positive bias. Immediate support is located near the 33,600 level. Holding above this zone could help stabilize sentiment and keep the broader consolidation intact. However, a sustained break below 33,600 may trigger additional selling pressure and increase the risk of a decline toward the 33,400 area in the near term. On the upside, a decisive move above the 33,750-resistance level would strengthen bullish sentiment and could open the door for a further advance toward the 34,000 region.