Canadian stocks fell sharply on Friday

Index Update: Canadian stocks fell sharply on Friday, extending yesterday's slide as investors assessed the headwinds to the economy after U.S. attempts to pull businesses from Canada back to the U.S. amid the central bank governor's cautious remarks on the effect of tariffs. After opening below yesterday's close, the benchmark S&P/TSX Composite Index traded firmly negative to finally close at 30,108.48, down by 350.32 points (or 1.15%).

Macro Update: Governor of the Bank of Canada Tiff Macklem today stated that he expects growth in the Canadian economy to likely be softer during the second half of 2025 after activity contracted in the second quarter of this year. Macklem added that the central bank will put more emphasis on the potential risks ahead of rate decisions and warned that spillovers from Trump's tariff policies could weaken the economy.

Top Movers: Among the individual stocks, Alimentation Couche-Tard Inc (2.18%), Loblaw CO (1.89%), Premium Brands Holdings Corp (1.79%), Cogeco Communications Inc (2.86%), and Pet Valu Holdings Ltd (2.58%) were the prominent gainers.

Our Stance: Momentum indicators underscore the underlying strength, with the Relative Strength Index (RSI) at 54.74 an elevated reading that reflects solid bullish momentum but also hints at potential overbought conditions. This may lead to short-term consolidation or a corrective phase. On the downside, immediate support lies near 30,000, a crucial level for bulls to defend. A decisive move below this zone could open the door for deeper retracements toward 29,800 and 29,600.

Commodity Update: The U.S. dollar steadied on Monday as easing trade tensions between Beijing and Washington and reduced concerns over U.S. regional banks lifted risk appetite. Gold gained 1.27% to USD 4,268.70 per ounce, silver rose 1.30% to USD 50.28, and copper advanced 1.09% to USD 10,709.95. However, Brent crude slipped 0.40% to USD 61.05 per barrel amid persistent worries over a global supply glut and softer energy demand.

Technical Update:

The S&P/TSX Composite Index fell by 350.32 points (−1.15%) in Friday’s session to close at 30,108.48. The decline was largely attributed to mild profit-taking; however, the broader technical outlook remains positive. From a trend standpoint, the index continues to trade well above its 50-period Simple Moving Average (SMA), which serves as dynamic support and reinforces the prevailing short-term uptrend. Sustained closes above this level suggest that buyers still maintain control despite recent volatility. Momentum indicators also underscore underlying strength, with the Relative Strength Index (RSI) at 54.74 an elevated reading that reflects solid bullish momentum but also hints at potential overbought conditions. This may lead to short-term consolidation or a corrective phase. On the downside, immediate support lies near 30,000, a crucial level for bulls to defend. A decisive move below this zone could open the door for deeper retracements toward 29,800 and 29,600.