Canadian stocks gained modestly on Thursday

                                                           Source: Krish Capital Pty Ltd

Index Update:

After opening just higher than yesterday's close, the benchmark S&P/TSX Composite Index traded firmly positive throughout the session. Hitting an intraday high of 29,418.78, the finally settled at 29,407.89, up by 228.50 points (or 0.78%). Today's closing value is a new record high for the index.

Macro Update:

In the US, the CPI data from today and PPI numbers from yesterday have reinforced expectations of a US Fed rate cut at the upcoming September 16-17 Fed's meeting. Traders are pricing in a similar rate cut by Bank of Canada.

A combination of weaker jobs data, both north and south of the border, has provided the bank a compelling reason to deliver a 25-point cut in their upcoming meeting, according to experts.

The government's five-year bond yield is in the 2.7% range for the first time after May 2025. The 10-year yield rose to 3.225% on Tuesday before falling to 3.174% on Wednesday.

Top Movers:

Among the individual stocks, Bird Construction Inc (6.88%), Restaurant Brands International Inc (2.26%), Dream Industrial REIT (1.71%), Fortuna Mines Inc (6.31%) and Novagold Res Inc (5.34%) were the prominent gainers.

Our Stance:

At present, the index is testing a critical support zone near 29,200. Sustaining price action above this threshold will be pivotal to reinforcing market confidence and preserving the broader uptrend. Conversely, a decisive break down below 29,200 could signal a short-term exhaustion of bullish momentum, potentially triggering a pullback. In such a scenario, the next immediate support levels are positioned at 29,000 and 28,700, which could act as buffers against deeper declines.

Commodity Update:

The dollar weakened Friday as higher U.S. jobless claims and a slight rise in inflation reinforced expectations of Federal Reserve rate cuts. Gold gained 0.23% to $3,685.85, silver climbed 0.87% to $42.51, and copper edged up 0.16% to $10,080.20. Brent crude slipped 0.50% to $66.03, pressured by weak demand and ample supply, though supported by geopolitical tensions in Russia-Ukraine and the Middle East, alongside potential U.S. sanctions on Moscow.

Technical Update:

On Thursday, the S&P/TSX Composite Index posted a strong gain of 228.50 points, or 0.78%, closing at 29,407.89. The move was accompanied by robust trading volumes, reinforcing the underlying investor confidence and supporting the ongoing bullish momentum. From a technical perspective, the index maintains a firmly bullish structure, trading comfortably above the 21-period Simple Moving Average (SMA), a widely watched short-term trend indicator that continues to act as dynamic support. Momentum indicators also reflect strong buying pressure, with the Relative Strength Index (RSI) currently at 83.28. While this reading places the index in overbought territory, it simultaneously highlights the intensity of upward momentum, which may allow the rally to extend further before any meaningful correction materializes. At present, the index is testing a critical support zone near 29,200. Sustaining price action above this threshold will be pivotal to reinforcing market confidence and preserving the broader uptrend. Conversely, a decisive break down below 29,200 could signal a short-term exhaustion of bullish momentum, potentially triggering a pullback. In such a scenario, the next immediate support levels are positioned at 29,000 and 28,700, which could act as buffers against deeper declines.