Canadian stocks moved sharply lower on Tuesday

Index Update:  After opening lower than yesterday's close, today the benchmark S&P/TSX Composite Index traded below the flatline throughout the session before settling at 32,750.28, down by 340.68 points (or 1.03%).

Macro Update:  The Bank of Canada's latest Business Outlook Survey, conducted in the last quarter of 2025 indicated that business sentiments are subdued though the fears of a recession have decreased. Yesterday, Statistics Canada data revealed that the annual pace of inflation rose to 2.40% in December though core inflation continued to cool. Several analysts expect Bank of Canada to hold the interest rates currently with the central bank's next meeting on monetary policy coming up in a week's time. In the U.S., data released by the Automatic Data Processing revealed that the private employers added an average of 8,000 jobs per week for the four weeks ending December 27, down from an average gain of 11,250 in the previous period.

Top Movers:  Among the individual stocks, Transalta Corp (3.24%), G Mining Ventures Corp (10.75%), Orla Mining Ltd (10.72%), Centerra Gold Inc (8.18%), and Aya Gold and Silver Inc (7.32%) were the prominent gainers.

Our Stance: Momentum indicators remain favourable, with the 14-period RSI holding at 62.97, indicating sustained buying interest while staying within neutral-to-positive territory. This suggests that the pullback is corrective rather than trend-reversing. On the downside, 32,700 is the immediate support level to watch. A decisive break below this zone could open the door for further consolidation toward 32,500, with the next major support positioned near 32,400. As long as the index holds above these key levels, the medium-term outlook remains positive.

Commodity Update:  The U.S. dollar hovered near three-week lows against the euro and Swiss franc on Wednesday, as renewed White House rhetoric over Greenland weighed on U.S. assets, including equities and Treasuries. Gold rose 1.36% to USD 4,834.20, while silver eased 0.95% to USD 93.73. Copper advanced 0.55% to USD 12,851.00. Brent crude declined 1.22% to USD 64.13, pressured by expectations of higher U.S. inventories despite temporary supply disruptions.

 Technical Update:

The S&P/TSX Composite Index declined by 340.68 points (−1.03%) on Tuesday, closing at 32,750.28, as short-term profit booking capped the recent upside momentum. While the session reflected a corrective pause, the broader technical structure remains constructive. The index continues to trade comfortably above its 21-period Simple Moving Average (SMA), which is acting as an important dynamic support and reinforcing the prevailing bullish trend. Momentum indicators remain favourable, with the 14-period RSI holding at 62.97, indicating sustained buying interest while staying within neutral-to-positive territory. This suggests that the pullback is corrective rather than trend-reversing. On the downside, 32,700 is the immediate support level to watch. A decisive break below this zone could open the door for further consolidation toward 32,500, with the next major support positioned near 32,400. As long as the index holds above these key levels, the medium-term outlook remains positive.