Canadian stocks once again came under pressure

Image Source : Krish Capital Pty Ltd

Index Update: After failing to sustain an early move to the upside, Canadian stocks once again came under pressure over the course of the trading session on Tuesday. The S&P/TSX Composite Index slumped 352.56 points or 1.5 percent to 22,506.90, hitting its lowest closing level since last August.

Macro Update: A White House official told CNBC the effective tariff rate on China will spike to 104 percent at midnight, when Trump's other "reciprocal tariffs" are also set to take effect.

Canada announced that from tomorrow, certain U.S. vehicles entering the country will incur 25% tariffs, further fueling fears of a broader trade conflict.

Developments on the tariff front are likely to remain in the spotlight on Wednesday, while traders are also likely to keep an eye on the minutes of the latest Federal Reserve meeting.

Top Losers: All nine major sectors closed in the red, with energy producers leading the decline as heavyweights Canadian Natural, Suncor, Imperial Oil, and Cenovus posted sharp losses ranging from 2.4% to 5.3%.

Our Stance: The pronounced sector weakness intensified bearish sentiment, pushing the index further below its 21-period Simple Moving Average (SMA), a sign of sustained downward momentum. Key support sits at 22,200, a critical horizontal level that could act as a stabilization point. If this level holds, it may pave the way for consolidation or a technical bounce. However, a decisive break below 22,200 would likely trigger a further downside, with the next support targets at 22,000 and 21,600.

Commodity Update: The U.S. dollar weakened against the yen and Swiss franc on Wednesday as looming 104% tariffs on China rattled global markets. President Trump, standing firm on the increase, accused Beijing of yuan manipulation. The Chinese currency hit record lows. Gold rose 0.88% to $3,016.60, silver gained 0.42%, while copper slipped 0.54%. Brent crude dropped 3.39% to $60.69 amid demand fears from the escalating U.S.-China trade war and expectations of rising global oil supply.

Technical Update: On Tuesday, the S&P/TSX Composite Index tumbled 353.56 points (-1.54%) to close at 22,506.90, with a steep 8.48% drop in the healthcare sector dragging the broader market sharply lower. The pronounced sector weakness intensified bearish sentiment, pushing the index further below its 21-period Simple Moving Average (SMA), a sign of sustained downward momentum and selling pressure. The Relative Strength Index (RSI) has slipped to 25.29, approaching oversold territory hinting at the possibility of a short-term relief rally. Still, the broader trend remains cautious. Key support sits at 22,200, a critical horizontal level that could act as a stabilization point. If this level hold, it may pave the way for consolidation or a technical bounce. However, a decisive break below 22,200 would likely trigger a further downside, with the next support targets at 22,000 and 21,600.