Canadian Stocks Fall Amid Profit-Taking

Image Source : Krish Capital Pty Ltd

Index Update: Canadian stocks declined on Monday as investors resorted to profit-taking from last week's record high close. After opening lower than the previous week's record close, the benchmark S&P/TSX Composite Index slid further into negative territory. Touching an intraday low of 28,138.70 within an hour, the index rose mildly to close at 28,169.94, down by 163.19 points (or 0.58%).

Macro Update:  On Friday, Carney stated that Canada's 25% tariffs on around $21 billion worth of US goods will go away beginning September 1, and economists feel this could pave way for smoother US-Canada dialogue and dissipate the trade-related inflation to a moderate degree. The Bank of Canada has held its policy rate at 2.75% for three consecutive meetings. The July CPI reading, which showed core inflation easing to 2.4%, has reignited discussions on the possibility of lowering of lending rates by the Bank of Canada.

Top Movers:  Among the individual stocks, Cenovus Energy Inc (2.07%), Parex Resources Inc (1.93%), Suncor Energy Inc (1.23%), and Metro Inc (0.32%) were the prominent gainers.

Our Stance:  The index is currently testing a key support zone near 28,100; holding above this level is crucial to sustain the ongoing uptrend. A decisive break below could prompt a retracement, with the next supports placed at 27,800 and 27,600 on the daily chart.

Commodity Update:  The dollar and U.S. Treasuries weakened Tuesday after President Trump’s unprecedented dismissal of Fed Governor Lisa Cook, raising concerns over central bank independence. The move pressured the dollar against the yen and euro. Gold rose 0.16% to $3,422.90, silver slipped 0.01% to $38.70, copper gained 0.70% to $9,848.35, and Brent crude fell 0.44% to $67.92. Oil eased as markets weighed U.S. sanctions on Russia against Ukraine conflict risks and rate-cut hopes

Technical Update:

The S&P/TSX Composite Index slipped by 163.19 points on Monday, closing at 28,169.94, a decline of 0.58%. The pullback was largely driven by weakness in the consumer non-cyclicals sector, which dropped 2.06% and weighed on overall market performance. From a technical perspective, the index continues to demonstrate underlying strength, holding above the 50-period Simple Moving Average (SMA)—a key trend indicator that reinforces the broader bullish structure. The Relative Strength Index (RSI) is currently at 65.01, reflecting healthy momentum while still leaving room for further upside before reaching overbought conditions. At present, the index is testing a critical support zone near 27,900. Sustaining above this level will be essential to preserve the prevailing uptrend. A decisive break below 27,900 could open the door to a deeper retracement, with additional support identified in the 27,700–27,500 range. Maintaining these levels will be vital for the near-term bullish outlook to remain intact.