Canadian stocks fell on Monday

Index Update:  Canadian stocks fell on Monday as investors brace for crucial monetary policy meetings by both the central banks in Canada and the U.S. which will be followed by new interest rate announcements. After opening just above previous week's close, the benchmark S&P/TSX Composite Index lost ground within an hour and traded lower throughout the rest of the session before closing at 31,169.97, down by 141.44 points (or 0.45%).

Macro Update:  In the U.S., the Federal Open Market Committee of the Federal Reserve convenes tomorrow for a two-day meet, at the end of which the team will announce new interest rates. A spate of economic releases after the shutdown have given a mixed data on inflation but indicated a cooling job market. Recently, several Fed governors expressed their support for lowering rate cuts. Contrary to the U.S, expectations in Canada remain muted for a Bank of Canada rate cut. Economists and traders feel alike that the rates would be held steady by the central bank. Data released by Statistics Canada on Friday revealed that unemployment rate fell to 6.5% in November (from 6.9% in October) against expectations of an increase to 7%. While Canada's employment rose by 54,000 (or 0.3%) in November (following a 66,600 increase in October), the average hourly wages for permanent workers rose 4% year-on-year (at C$38.02) in November. The strong numbers dampened expectations of another rate cut despite the job gains being predominantly in part-time sector.

Top Movers: Among the individual stocks, Dye & Durham Ltd (44.24%), Transcontinental Inc (19.07%), Celestica Inc (5.12%), Quarterhill Inc (4.49%), Aecon Group Inc (3.76%), and Fairfax Financial Holdings Ltd (4.73%) were the prominent gainers.

Our Stance:  Momentum conditions also remain firm, with the 14-period RSI holding near 58.29—reflecting neutral-to-positive momentum without signs of overextension. On the downside, immediate support is situated near the 31,000 level, a critical zone that bulls must defend to prevent deeper corrective pressure. A decisive break below this area could expose the index to additional downside toward 30,800, followed by 30,600.

Commodity Update:  The yen held firm in early Asian trade after a strong 7.5-magnitude quake hit northeast Japan, heightening risk-off sentiment ahead of key central bank decisions, including the Federal Reserve. Gold edged up 0.09% to USD 4,221.25, silver rose 0.55% to USD 58.72, while copper slipped 0.27% to USD 11,593. Brent crude was marginally lower at USD 62.47 as markets watched Ukraine peace talks and an approaching U.S. rate decision.

Technical Update: 

The S&P/TSX Composite Index slipped 141.44 points (−0.45%) on Monday to close at 31,169.97, as light profit-taking weighed on sentiment. Despite the modest pullback, the broader technical structure remains constructive. The index continues to trade comfortably above its 50-period Simple Moving Average (SMA), a key dynamic support that has been reinforcing the prevailing short-term uptrend and signaling continued buyer control. Momentum conditions also remain firm, with the 14-period RSI holding near 58.29—reflecting neutral-to-positive momentum without signs of overextension. On the downside, immediate support is situated near the 31,000 level, a critical zone that bulls must defend to prevent deeper corrective pressure. A decisive break below this area could expose the index to additional downside toward 30,800, followed by 30,600.