Canadian stocks fell on Wednesday

index Update:

Canadian stocks fell on Wednesday, giving back part of the previous session’s gains as renewed attacks in the Middle East disrupted progress toward a U.S.-Iran peace agreement and postponed the anticipated reopening of the Strait of Hormuz.

After opening lower than yesterday's close, today the benchmark S&P/TSX Composite  Index traded firmly negative throughout the session before settling at 34,801.54, down by 367.92 points (or 1.05%).

Macro Update:

Iranian news agencies reported that Iran paused talks with the U.S. to protest against Israel's attacks on Lebanon.

However, Trump rejected those claims and assured that the talks were going on uninterruptedly. Trump also announced that he had secured a ceasefire between Israel and Lebanon and affirmed that both nations have agreed to halt attacks on each other.

In a note on Canada's economy, today the Organization for Economic Cooperation and Development stated that Gross Domestic Product growth is set to rebound later in the year (to reach 1.20%) and continue to grow in 2027 (reaching 1.70%).

The OECD commented that Canada's position as a net energy exporter supports its growth but admitted that Inflation could rise in the near-term.

The S&P Global Canada Composite Purchasing Managers' Index increased to 50.80 in May from 49.90 in April while the Services PMI eased to 50.70 from 51.00 of the previous month.

Top Movers:

Among the individual stocks, Empire Company Limited (2.23%), The North West Company Inc (2.21%), Advantage Energy Ltd (4.90%), and Athabasca Oil Corp (3.14%) were the prominent gainers.

Our Stance:

The immediate support is located near the 34,700 level, and a break below this area could lead to short-term consolidation toward 34,400. On the upside, a sustained move above the key psychological resistance at 35,000 would confirm renewed bullish strength and could pave the way for a further advance toward the 35,200 level. Overall, the medium-term outlook remains positive as long as the index continues to hold above its key support levels.

Commodity Update:  

Global commodity and currency markets remained focused on escalating Middle East tensions, supporting safe-haven Demand and keeping the U.S. dollar near a two-month high. Gold advanced 0.77% to USD 4,502.90, while silver gained 0.17% to USD 73.82. Copper edged lower by 0.06% to USD 13,788.90 amid cautious sentiment. Brent Crude declined 0.70% to USD 97.16, snapping a three-session rally as traders booked profits despite ongoing geopolitical risks and signs of tightening U.S. crude inventories. Risk appetite remained subdued across broader financial markets.

Technical Update:

The S&P/TSX Composite Index fell 367.92 points, or 1.05%, to close at 34,801.54. From a technical perspective, the index continues to trade above its 21-day Simple Moving Average (SMA), which remains an important source of dynamic support and reinforces the broader bullish trend. Momentum remains constructive, with the 14-day Relative Strength Index (RSI) at 58.48, indicating healthy buying interest while remaining below overbought territory, leaving room for further upside. Immediate support is located near the 34,700 level, and a break below this area could lead to short-term consolidation toward 34,400. On the upside, a sustained move above the key psychological resistance at 35,000 would confirm renewed bullish strength and could pave the way for a further advance toward the 35,200 level. Overall, the medium-term outlook remains positive as long as the index continues to hold above its key support levels.