Canadian stocks jumped on Monday as the threat of a partial U.S. government shutdown

                                                    Source: Krish Capital Pty Ltd

Index Update:

Canadian stocks jumped on Monday as the threat of a partial U.S. government shutdown along with increasing expectations of a U.S. Federal Reserve rate cut increased gold prices and lifted commodity stocks.

After opening well above the previous week's close, the benchmark S&P/TSX Composite Index gained momentum to trade firmly positive throughout the trading session and reached an intraday high of 29,980.48 before closing to finally settle at 29,971.91, up by 210.63 points (or 0.71%).

Macro Update:

Starting October 1, the U.S. government may go into a partial shutdown as Democrats and Republicans are locking horns over allowing temporary funding required to run the machinery.

Trump wants to first pass a temporary bill extending the funding and discuss healthcare issues later. On the other hand, Democrats are insisting on extending the Affordable Care Act subsidies that support keeping healthcare costs within reach for nearly 24 million Americans as part of the bill.

In the U.S., the core PCE price index number released last Friday revealed a 0.23% rise in August. On a 12-month basis, the Fed's key core inflation rate ticked up to 2.91% from 2.85%.

Top Movers:

Among the individual stocks, Bitfarms Ltd (10.39%), Shopify Inc (6.17%), Dye & Durham Ltd (4.39%), First Quantum Minerals Ltd (8.38%), Seabridge Gold Inc (7.82%), and Hudbay Minerals Inc (7.35%). were the prominent gainers.

Our Stance:

The index is now consolidating around a critical support zone near 29,700. Sustaining levels above this threshold will be essential for maintaining market confidence and a broader uptrend. Conversely, a decisive break below could signal short-term bullish fatigue, potentially triggering a pullback toward the next support levels at 29,500 and 29,300.

Commodity Update:

The U.S. dollar weakened on Tuesday as investors grew cautious ahead of a possible government shutdown that could delay key economic data, including the jobs report. Gold rose 0.51% to $3,874.90, silver edged up 0.17% to $47.09, while copper slipped 0.72% to $10,367.70. Brent crude fell 0.50% to $67.65 on OPEC+ production hike concerns, while easing Gaza tensions reduced geopolitical risk premiums.

Technical Update:

On Monday, the S&P/TSX Composite Index climbed 210.63 points (0.71%) to close at 29,971.91. The advance was accompanied by strong trading volumes, underscoring sustained investor confidence and reinforcing the prevailing bullish momentum. From a technical perspective, the index continues to uphold a solid bullish structure, trading comfortably above its 21-period SMA, which serves as dynamic support. Momentum indicators remain robust, with the RSI at 78.16, highlighting persistent buying pressure. The index is now consolidating around a critical support zone near 29,700. Sustaining levels above this threshold will be essential for maintaining market confidence and a broader uptrend. Conversely, a decisive break below could signal short-term bullish fatigue, potentially triggering a pullback toward the next support levels at 29,500 and 29,300.