Canadian stocks hit new record highs

Source: Krish Capital Pty Ltd

Index Update:

Canadian stocks hit new record highs, posting modest gains on Friday as softer jobs data indicating a cooling labor market amid economic uncertainty boosted expectations for a rate cut by the central bank, mirroring the scenario in Canada's neighbor the US.

After opening at 29,0002.78 - above the 29K mark for the first time - the benchmark S&P/TSX Composite Index, hit a record intraday high of 29,115.42 within an hour. The index later drifted down until before managing to gather momentum for the rest of the session to finally settle at 29,050.63, up by 134.74 points (or 0.47%). Today's close is the eighth consecutive all-time high for the index.

Macro Update:

Data released by Statistics Canada revealed that the unemployment rate in Canada increased 0.2 percentage points to 7.1% in August, the highest level in four years and above market expectations of 7%.

The soft labor market data has increased expectations of a rate cut by the Bank of Canada at their September meeting. Amid broader economic uncertainty, the report marks the second consecutive month of job losses.

Similarly, in the US, non-farm payrolls data released today revealed a cooling of the labor market, intensifying rate cut expectations during the US Fed's September monetary policy meeting.

Top Movers:

Among the individual stocks, Equinox Gold Corp (9.02%), Triple Flag Precious Metals Corp (5.44%), Teck Resources Ltd (5.06%), Iamgold Corp (4.81%), and Celestica Inc (9.86%) were the prominent gainers.

Our Stance:

The index is currently testing a key support zone around 28,800. Sustaining levels above this threshold will be critical to preserve the prevailing uptrend. However, a decisive breakdown below could trigger a pullback, with the next support levels identified near 28,600 and 27,400 on the daily chart.

Commodity Update:

The dollar wavered on Monday after weak U.S. labour data reinforced expectations of a rate cut, while the yen slid on political uncertainty following Prime Minister Shigeru Ishiba’s resignation. Commodities showed mixed trends: gold slipped 0.51% to $3,634.45, silver fell 0.49% to $41.34, and copper gained 0.23% to $9,910.35. Brent crude rose 0.60% to $65.90, supported by slower OPEC+ production hikes and geopolitical tensions surrounding the Russia-Ukraine conflict.

Technical Update:

On Friday, the S&P/TSX Composite Index advanced 83.86 points, or 0.38%, to close at 29,050.63, supported by strong trading volumes that reinforced investor confidence. The basic materials sector led the rally with a notable 2.60% gain, reflecting renewed optimism in the space. From a technical standpoint, the index continues to display a bullish structure, holding comfortably above its 21-period Simple Moving Average (SMA). Momentum remains strong, with the Relative Strength Index (RSI) at 79.61, suggesting further upside potential despite being in overbought territory. The index is currently testing a key support zone around 28,800. Sustaining levels above this threshold will be critical to preserve the prevailing uptrend. However, a decisive breakdown below could trigger a pullback, with the next support levels identified near 28,600 and 27,400 on the daily chart.