Canadian stocks fell on Thursday as investors resorted to profit-taking

Image Source : Krish Capital Pty Ltd

Canadian stocks fell on Thursday as investors resorted to profit-taking from the past two days of record highs and also gauged the impact of high US tariffs taking effect beginning today on Canada's businesses. After opening just a little above yesterday's record high, the benchmark S&P/TSX Composite Index dropped within minutes and traded in negative territory throughout most of the session before finally closing at 27,761.27, down by 159.60 points (or 0.57%).

Macro Update:  Today is a crucial day in Canada's economic calendar as the high tariffs set by the US President Donald Tariff on a vast majority of exporters to the US, including Canada, take effect. On the data front, numbers released by Ivey Business School today revealed that the Ivey Purchasing Managers Index in Canada rose to 55.8 in July from 53.3 in June, above market expectations of 55.2. This signals economic expansion for the second consecutive month. The yield on the Canadian 10-year government bond hovered near 3.39%.

Top Movers:  Among the individual stocks, Lundin Mining Corp (10.52%), Oceanagold Corp (10.30%), BCE Inc (2.06%), and Rogers Communications (1.98%) were the prominent gainers.

Our Stance:  At present, the index is testing a critical support level near 27,500. The ability to sustain this level will be crucial in maintaining upward momentum. If the index manages to hold above this threshold, it could provide a solid foundation for a renewed rally.

Commodity Update:  The U.S. dollar weakened on Friday, heading for a weekly decline after President Trump’s interim Fed Governor pick raised hopes of a dovish successor to Jerome Powell. Gold climbed 1.10% to $3,491.90, silver added 0.54% to $38.50, and copper edged up 0.19% to $9,701.10. Brent crude inched up 0.01% to $66.40, as investors weighed the global economic risks from newly imposed tariffs

Technical Update: 

On Thursday, the S&P/TSX Composite Index closed at 27,761.27, registering a loss of 0.57%. The downturn was primarily driven by the underperformance of the consumer cyclicals sector, which suffered a notable drop of 1.55%. Despite the decline, the index continues to trade above its 21-period Simple Moving Average (SMA), suggesting that the longer-term bullish trend remains intact. This technical indicator serves as a key gauge of market momentum, and the fact that the index remains above it reinforces the potential for continued upside movement. Additionally, the Relative Strength Index (RSI) currently stands at 63.12, reflecting a balanced market environment.  At present, the index is testing a critical support level near 27,500. The ability to sustain this level will be crucial in maintaining upward momentum. If the index manages to hold above this threshold, it could provide a solid foundation for a renewed rally.