Canadian stocks edged higher on Wednesday

Index Update: Canadian stocks edged higher on Wednesday as market focus shifts to the upcoming budget along with increasing expectations of central bank rate cuts despite an extended pullback by bullion prices weakening metal and mining stocks.

After opening slightly below yesterday's close, the benchmark S&P/TSX Composite Index remained volatile for most part of the trading session before finally closing at 29,982.98, up by 94.16 points (or 0.32%).

Macro Update: As the Bank of Canada is set to announce its interest rate decision on October 29, expectations for a rate cut are increasing

Despite a solid gain of 60,000 jobs and an unemployment rate steady at 7.1% in September, Bank of Canada governor Tiff Macklem noted last week that the labour market has been soft over the course of many months.

Canadian automobile, steel, and aluminum sectors are slowly feeling the pain of U.S. tariffs with, many businesses domestically laying off workers or slowing hiring.

Automaker Stellantis announced reshoring a part of its production back to the U.S., leading to several job losses.

Data released by Statistics Canada yesterday revealed that for the month of September, the year-on-year annual inflation rate in Canada rose to 2.4% from 1.9% in the previous month. For the same month, the month-on-month CPI edged up 0.1%, rebounding from a 0.1% decline in August.

Top Movers: Among the individual stocks, Ces Energy Solutions Corp (5.03%), Athabasca Oil Corp (4.56%), Headwater Exploration Inc (4.18%), Saputo Inc (2.36%), and Cogeco Communications Inc (1.58%) were the prominent gainers.

Our Stance: At present, the index is consolidating around a critical support zone near 29,700. Sustaining levels above this threshold will be vital for preserving investor sentiment and maintaining a broader uptrend. Conversely, a decisive break down below 29,700 could signal short-term exhaustion of bullish momentum, exposing the index to a pullback toward immediate supports at 29,600 and 29,400.

Commodity Update: The dollar edged higher on Thursday as investors awaited Friday’s delayed U.S. inflation data and monitored renewed tariff tensions between Washington and Beijing. Gold rose 0.69% to USD 4,093.05 per ounce, silver gained 0.47% to USD 47.90, and copper added 0.13% to USD 10,686.95. Brent crude advanced 1.76% to USD 64.35, extending gains after the U.S. imposed sanctions on Russian oil majors Rosneft and Lukoil. 

Technical Update:

On Wednesday, the S&P/TSX Composite Index advanced 94.16 points (+0.32%) to close at 29,998.98, supported by robust trading volumes that reflected sustained investor confidence and reinforced the prevailing bullish momentum. From a technical standpoint, the index retains a firmly bullish structure, trading comfortably above its 50-period Simple Moving Average (SMA), which continues to function as a dynamic support. Momentum indicators also remain constructive, with the Relative Strength Index (RSI) at 51.29, signaling resilient buying interest within neutral territory. At present, the index is consolidating around a critical support zone near 29,700. Sustaining levels above this threshold will be vital for preserving investor sentiment and maintaining a broader uptrend. Conversely, a decisive break down below 29,700 could signal short-term exhaustion of bullish momentum, exposing the index to a pullback toward immediate supports at 29,600 and 29,400.