Canadian stocks edged lower on Wednesday

Index Update:

Canadian stocks declined further on Wednesday, extending losses from the previous session, as rising tensions and emerging disagreements between the U.S. and Iran dampened investor risk appetite. Weakness in the energy sector, driven by lower oil prices, and declines in gold-related materials stocks also weighed on the broader market.

After opening below yesterday's close, today the benchmark S&P/TSX Composite Index traded negative throughout the session before settling at 34,736.09, down by 191.29 points (or 0.55%).

Macro Update:

Most economists, including at the Bank of Canada, were a bit surprised when Statistics Canada reported late last month that the economy contracted slightly over the first three months of the year. The consensus estimate among economists and monetary policymakers was for real GDP growth of roughly 1.5 per cent annualized in the first quarter.

Gold prices declined as the dollar strengthened on rising bets for further US rate hikes, weighing on mining shares.

Top Movers:

The biggest gainers of the session on the S&P/TSX Composite were Shopify Inc (TSX:SHOP), which rose 6.12% or 9.38 points to trade at 162.59 at the close. Boyd Group Services Inc (TSX:BYD) added 5.81% or 7.44 points to end at 135.60 and Waste Connections Inc (TSX:WCN) was up 4.61% or 10.43 points to 236.88 in late trade.

Our Stance:

As long as the index holds above this zone, the current positive technical structure is likely to remain intact, supporting the potential for renewed buying interest. A successful defence of support could encourage the index to resume its upward trajectory and challenge higher levels in the sessions ahead.

Commodity Update:

Gold prices extended their decline in Asian trading on Thursday, remaining close to their lowest levels in more than seven months as a stronger U.S. dollar and expectations of additional Federal Reserve policy tightening reduced demand for the non-yielding precious metal. Gold declined 0.42% to USD 3,993.35 per ounce, while silver dropped 2.14% to USD 56.83 per ounce. Copper advanced 0.58% to USD 13,106.00 per metric ton. Meanwhile, Brent crude oil slipped 0.50% to USD 73.38 per barrel as concerns over Middle East supply disruptions continued to ease. 

Technical Update:

The S&P/TSX Composite Index fell by 191.29 points, or 0.55%, on Wednesday to close at 34,736.09, reflecting a period of short-term weakness following recent gains. Despite the decline, the broader technical outlook remains constructive, with the index continuing to trade comfortably above its 50-day Simple Moving Average (SMA), which acts as an important dynamic support level and reinforces the prevailing bullish trend. Momentum indicators remain relatively supportive, with the 14-day Relative Strength Index (RSI) hovering around 50.97, indicating balanced market conditions and suggesting that underlying buying interest remains intact while leaving room for further upside before reaching overbought territory. Immediate support is positioned near the 34,600 level. As long as the index holds above this zone, the current positive technical structure is likely to remain intact, supporting the potential for renewed buying interest. A successful defence of support could encourage the index to resume its upward trajectory and challenge higher levels in the sessions ahead.