Canadian stocks moved higher on Thursday

Source: Krish Capital Pty Ltd

Index Update:

Canadian stocks moved higher on Thursday as markets assessed the implications of interest rate cuts instituted by the central banks - both in Canada and the US - against the backdrop of a slowdown in the jobs markets in both nations.

After opening just above yesterday's close, the benchmark S&P/TSX Composite Index traded positive, notching a record intraday high of 29,504.21 an hour past noon before finally settling at 29,453.53, up by 131.87 points (or 0.45%).

Macro Update:

In a significant move yesterday, the Bank of Canada cut its benchmark interest rate by 25 basis points to 2.50%, with the bank rate at 2.75% and the deposit rate at 2.45%. The next scheduled date for announcing the overnight rate target is October 29.

Mirroring Canada, the US Federal Reserve also lowered the target range for the federal funds rate by 25 basis points to 4.0% to 4.25%, citing a "shift in the balance of risks." Projections from Fed officials also suggest they expect the central bank to lower rates two more times this year.

Top Movers:

Among the individual stocks, Bitfarms Ltd (5.00%), Blackberry Ltd (4.70%), Shopify Inc (3.03%), Brookfield Corporation (2.18%), and Bausch Health Companies Inc (1.17%) were the prominent gainers.

Our Stance:

Currently, the index is consolidating around a critical support zone near 29,200. Holding above this threshold will be pivotal to sustaining market confidence and preserving the broader uptrend. However, a decisive break below 29,200 could signal short-term exhaustion of bullish momentum, exposing the index to a pullback toward the next support levels at 29,000 and 28,700.

Commodity Update:

The U.S. dollar steadied in early Asian trade Friday, edging up against the yen ahead of the Bank of Japan’s policy decision, as markets sought fresh direction after the Federal Reserve’s rate cut. Gold rose 0.11% to $3,682.30, silver gained 0.65% to $42.38, and copper advanced 0.33% to $9,982.30. Brent crude slipped 0.12% to $67.36, pressured by concerns over U.S. fuel demand.

Technical Update:

On Thursday, the S&P/TSX Composite Index advanced 131.87 points, or 0.45%, to close at 29,453.53. The gain was supported by strong trading volumes, underscoring investor confidence and reinforcing the prevailing bullish momentum. From a technical perspective, the index maintains a firmly bullish structure, trading comfortably above its 21-period SMA, which continues to act as a dynamic short-term support level. Momentum indicators also highlight sustained buying pressure, with the RSI at 75.86, reflecting strong momentum. Currently, the index is consolidating around a critical support zone near 29,200. Holding above this threshold will be pivotal to sustaining market confidence and preserving the broader uptrend. However, a decisive break below 29,200 could signal short-term exhaustion of bullish momentum, exposing the index to a pullback toward the next support levels at 29,000 and 28,700.