Canadian stocks fell steeply on Wednesday

Image Source : Krish Capital Pty Ltd

Index Update:  After opening a little lower than yesterday's close, the benchmark S&P/TSX Composite Index moved up to reach an intraday high of 27,581.23 within an hour. However, unable to hold on, the index fell into negative territory and finally closed at 27,369.96, down by 169.92 (or 0.62%).

Macro Update:  With the August 1 deadline for "reciprocal tariffs" suspension period very close by, Canada is battling intensely to find a common path with the US to continue its trade without losing heavily. Despite no breakthrough happening out of the month-long negotiations, Canadian business houses do not foresee a "worst-case scenario" and are not preparing for any recession within the country as highlighted in a recent survey. The Bank of Canada today maintained its target for the overnight rate at 2.75% with the Bank Rate at 3% and the Deposit Rate at 2.70%. The bank has signaled that it is ready to slash rates again should conditions warrant. The US Fed kept interest rates unchanged today though two Fed governors voted against the decision, suggesting signs of internal disagreement

Top Movers:  Among the individual stocks, Bausch Health Companies Inc (5.95%), Hudbay Minerals Inc (6.55%), G Mining Ventures Corp (5.47%), Orla Mining Ltd (5.24%), and Aya Gold and Silver Inc (5.16%) were the notable losers.

Our Stance:  The index is currently testing a key support zone near 27,100. Holding above this level is crucial to sustaining upward momentum. A decisive break below could open the door to a retracement toward the next support levels at 26,800 and 26,600. Maintaining these levels will be essential for preserving the near-term bullish outlook.

Commodity Update:  The US dollar approached a two-month high on Thursday after Federal Reserve Chair Jerome Powell maintained a patient stance on interest rates, offering little guidance on potential rate cuts. Meanwhile, President Donald Trump’s softened copper tariffs pressured Comex premiums. Gold slipped 0.30% to $3,342.60 per ounce, silver dropped 1.73% to $37.09 per ounce, copper declined 0.40% to 9,679.45, and Brent crude rose 0.40% to $73.51 amid supply concerns and geopolitical tensions.

Technical Update:

On Wednesday, the S&P/TSX Composite Index declined by 169.92 points, or 0.62%, to close at 27,369.96, weighed down by a 4.41% drop in the healthcare sector. Technically, the index remains on solid footing, trading above its 21-period Simple Moving Average (SMA), which continues to support the broader bullish trend. The Relative Strength Index (RSI) stands at 60.86, indicating healthy momentum while staying below overbought levels, leaving room for further gains. The index is currently testing a key support zone near 27,100. Holding above this level is crucial to sustaining upward momentum. A decisive break below could open the door to a retracement toward the next support levels at 26,800 and 26,600. Maintaining these levels will be essential for preserving the near-term bullish outlook.