Canadian stocks fell steeply on Thursday

Image Source : Krish Capital Pty Ltd

Index Update:  After opening higher than yesterday's close, the benchmark S&P/TSX Composite Index moved higher up to an hour reaching an intra-day high of 27,481.07. Losing momentum, it slipped to negative territory, and after failing to move up closed at 27,259.78, down by 110.18 (or 0.40%).

Macro Update:  Data released by Statistics Canada revealed that the Canadian economy likely expanded by 0.1% in June 2025, rebounding after two consecutive months of contraction. So far, despite trade disruption, the overall Canadian economy has been showing resilience. Businesses are reorienting the supply chains and export to non-US marketplaces. On the monetary front, the Bank of Canada has kept the basic lending rate targets unchanged, maintaining overnight rate at 2.75%, with the Bank Rate at 3% and Deposit Rate at 2.70%. In the same line, the US Fed also kept the lending rates unaltered, yesterday. As Canada's GDP numbers oscillate between slight losses and tiny gains, investors are eyeing on the developments in the US-Canada trade negotiations in the coming days after the crucial August 1 deadline elapses.

Top Movers:  Among the individual stocks, Ero Copper Corp (4.22%), Kinross Gold Corp (3.79%), Capstone Mining Corp (3.19%), and Lundin Mining Corp (3.06%) were the prominent gainers.

Our Stance:  The index is currently testing a critical support zone near 27,000. Holding above this level is essential to preserve the current upward trajectory. A decisive breakdown below 27,000 could trigger a retracement, with further support seen between 26,800 and 26,600. Sustaining these levels will be vital to maintain the near-term bullish outlook.

Commodity Update:  The U.S. dollar is on track for its strongest weekly gain in nearly three years, bolstered by President Donald Trump's announcement of new tariffs on multiple trade partners. The move raised concerns over global demand, particularly for oil. In commodities, gold dipped 0.28% to $3,339.65, silver fell 0.18% to $36.07, copper rose 0.19% to 9,629.5, and Brent crude declined 0.11% to $71.65 per barrel.

Technical Update:

The S&P/TSX Composite Index declined by 110.18 points on Thursday, closing at 27,259.78 a 0.40% loss. The healthcare sector was the main drag, plunging 4.95% during the session. Despite the pullback, the index remains technically strong, trading above its 50-period Simple Moving Average (SMA), a key level supporting the broader bullish trend. The Relative Strength Index (RSI) stands at 56.04, indicating healthy market momentum. The index is currently testing a critical support zone near 27,000. Holding above this level is essential to preserve the current upward trajectory. A decisive breakdown below 27,000 could trigger a retracement, with further support seen between 26,800 and 26,600. Sustaining these levels will be vital to maintain the near-term bullish outlook.