Canadian stocks edged lower on Tuesday

Index Update:

Canadian stocks edged lower on Tuesday, giving back part of the previous session’s gains as weakness in the energy sector, driven by the reopening of the Strait of Hormuz and lower oil prices, combined with declines in gold-related materials stocks amid concerns over elevated U.S. interest rates, weighed on the market.

After opening well below yesterday's close, today the benchmark S&P/TSX Composite Index gained momentum earlier but then gave ground to trade lower throughout the rest of the session before settling at 34,927.38, down by 74.80 points (or 0.21%).

Macro Update:

Worries that speculative AI spending by hyperscalers may be running ahead of fundamentals weighed on North American tech shares and hurt overall risk appetite. 

Gold prices also declined, extending pressure on mining stocks following the hawkish projections from the US Federal Reserve last week. 

Meanwhile, oil prices fell for a second straight session as supply concerns eased amid progress in restoring shipments through the Strait of Hormuz, reducing fears of energy-driven inflation but weighing on energy shares.

Top Movers:

The biggest gainers of the session on the S&P/TSX Composite were Alimentation Couche Tard Inc (TSX:ATD), which rose 11.68% or 9.61 points to trade at 91.87 at the close. Open Text Corp (TSX:OTEX) added 6.10% or 1.73 points to end at 30.07 and Thomson Reuters Corp (TSX:TRI) was up 5.84% or 6.34 points to 114.84 in late trade.

Our Stance:

On the upside, market participants will be closely watching the key resistance area around 35,150. A decisive breakout above this level could strengthen bullish sentiment, attract renewed buying interest, and potentially pave the way for a move toward the psychologically important 35,650 mark in the near term. Overall, the medium-term outlook remains positive while the index continues to hold above key support levels.

Commodity Update:

The U.S. dollar strengthened on Wednesday, holding near its highest level in more than a year as investors continued to assess the Federal Reserve’s recent hawkish policy stance. Risk sentiment remained cautious amid a global technology sector sell-off, prompting a shift toward defensive assets and currencies. Gold declined 1.83 points to USD 4,072.50, while silver slipped 1.33 points to USD 61.23. Copper edged higher by 0.14 points to USD 13,404.30. Brent crude oil eased 0.40 points to USD 76.76 amid improving Middle East supply expectations.

Technical Update:

The S&P/TSX Composite Index declined by 74.80 points, or 0.21%, on Tuesday to close at 34,927.38. Despite the pullback, the broader technical outlook remains constructive, with the index continuing to trade comfortably above its 50-day Simple Moving Average (SMA), which serves as a key dynamic support level and reinforces the prevailing bullish trend. Momentum indicators also remain supportive, with the 14-day Relative Strength Index (RSI) hovering around 54.23, suggesting healthy underlying buying interest while leaving room for further gains before reaching overbought conditions. Immediate support is located near the 34,800 level. As long as the index remains above this zone, the current positive momentum and favourable technical structure are likely to stay intact. On the upside, market participants will be closely watching the key resistance area around 35,150. A decisive breakout above this level could strengthen bullish sentiment, attract renewed buying interest, and potentially pave the way for a move toward the psychologically important 35,650 mark in the near term. Overall, the medium-term outlook remains positive while the index continues to hold above key support levels.