Canadian stocks edged lower on Friday

Index Update:

Canadian stocks edged lower on Friday as investors assessed the U.S.-Iran Memorandum of Understanding signed earlier in the week, while sentiment was weighed down by the cancellation of the planned first round of U.S.-Iran talks in Switzerland following renewed Israel-Hezbollah hostilities.

After opening below yesterday's close, today the benchmark S&P/TSX Composite Index gathered momentum initially but soon turned lower. Then, despite gaining ground, it remained volatile throughout the session before settling at 34,857.34, down by 111.92 points (or 0.32%).

Macro Update:

The discussions, aimed at addressing Iran’s nuclear program following a recently signed memorandum of understanding, were delayed, while the Federal Reserve’s surprise hawkish shift earlier in the week continued to weigh on sentiment.

Top Movers:

Financial stocks traded mixed, with RBC down 0.4% and TD Bank up 0.4%. Brookfield edged higher amid reports it is the frontrunner to acquire a controlling stake in XpFibre. Mining stocks moved lower as gold prices extended losses, with WPM down 4.8%, Agnico Eagle losing 2%, and Barrick falling 1.6%. Energy stocks were mixed amid uncertainty over US-Iran diplomacy, with Canadian Natural rising 1.2%, while Imperial Oil shed 0.6%.

Our Stance:

From a technical perspective, 34,750 remains an important near-term support level. A sustained hold above this zone would help preserve the current bullish structure and suggest that the recent weakness represents a period of consolidation rather than a trend reversal. Should buyers regain momentum, the index may be well positioned to resume its upward trajectory and target higher levels in the near term.

Commodity Update:

The U.S. Dollar Index remained near a one-year high on Monday as investors assessed ongoing geopolitical developments and trade disruptions. Shipping activity through the Strait of Hormuz continued to face delays, while initial talks between U.S. and Iranian officials under an interim peace arrangement encountered difficulties. Gold rose 0.80% to USD 4,206.20 per ounce, silver advanced 1.28% to USD 65.73 per ounce, and copper gained 0.41% to USD 13,654.00 per tonne. Brent crude oil increased 0.67% to USD 81.11 per barrel amid continued tensions surrounding U.S.-Iran relations.

Technical Update:

The S&P/TSX Composite Index declined 111.92 points (0.32%) on Friday to finish at 34,857.34, as investors engaged in modest profit-taking following the market's recent advance. Despite the softer close, the broader technical outlook remains positive, with the index continuing to trade comfortably above its 21-day Simple Moving Average (SMA), highlighting the strength of the prevailing uptrend. Momentum remains relatively healthy, with the 14-day Relative Strength Index (RSI) around 53.54, indicating balanced market conditions and underlying buying interest. As the RSI remains below overbought levels, there is still capacity for further upside should market sentiment improve. From a technical perspective, 34,750 remains an important near-term support level. A sustained hold above this zone would help preserve the current bullish structure and suggest that the recent weakness represents a period of consolidation rather than a trend reversal. Should buyers regain momentum, the index may be well positioned to resume its upward trajectory and target higher levels in the near term.