Canadian stocks posted decent gains on Friday

Index Update:  Canadian stocks posted strong gains on Friday after yesterday's slump as investors renewed their bets on another rate cut by the U.S. Federal Reserve. In addition, reports of deepening Canada-U.A.E. trade ties brought back optimism in the markets. After opening just above yesterday's close, the benchmark S&P/TSX Composite Index gained momentum later in the session to finally settle at 30,160.65, up by 254.10 points (or 0.85%).

Macro Update:  Recently, an employment data from the U.S. painted a mixed picture. While the nonfarm payroll numbers increased, unemployment data showed a hike in numbers. In addition, the minutes of October Federal Reserve's meeting showed that the Fed officials were divergent on their perspectives about rate cuts, leaving traders uncertain on an additional Fed cut this year. Canada's Prime Minister Mark Carney's visit to the United Arab Emirates and personal meeting with UAE President Sheikh Mohamad bin Zayed Al Nahyan resulted in two major announcements - the signing of a new Foreign Investment Promotion and Protection Agreement to establish a stable environment for investors from both the nations and the launch of negotiations for a Comprehensive Economic Partnership Agreement to create a full free trade deal. The UAE has agreed to invest around $50 billion in Canada in key sectors

Statistics Canada today revealed softness in the housing sector. New housing prices fell 0.4% month-over-month in October, marking the eighth consecutive month without an increase following a 0.2% decline in September. Meanwhile, Canada's retail trade excluding vehicles went up by 0.2% month-over-month in September.

Retail sales in Canada were expected to have remain unchanged from the previous month in October following a 0.7% decline in September. Year-on-year, retail sales in Canada increased 3.40% in September over the same month in the previous year.

Top Movers:  Among the individual stocks, Curaleaf Holdings Inc (9.45%), Tfi International Inc (6.46%), Chartwell Retirement Residences (2.27%), Magna International (5.64%), and Linamar Corp (4.21%) were the prominent gainers.

Our Stance: The index is currently testing an important support zone around 30,100. Holding above this level will be crucial to preserve market confidence and maintain the broader uptrend. However, a decisive break below 30,100 may suggest short-term bullish fatigue, opening the door to a pullback toward 30,000 and potentially 29,800 both of which represent meaningful secondary support levels that could cushion deeper downside risk.

Commodity Update:  The dollar remained firm on Monday as traders remained alert to potential yen intervention signals. At the same time, UK gilt markets turned cautious ahead of the British budget in a holiday-shortened week. New Zealand is also expected to cut rates at its upcoming policy meeting. Commodities softened, with gold down 0.86% to USD 4,080.40, silver easing 0.71% to USD 49.56, and copper marginally lower. Brent crude dipped 0.22% to USD 62.42 as Russia-Ukraine peace talks showed progress and a stronger dollar weighed on prices.

Technical Update:

The S&P/TSX Composite Index gained 254.10 points (+0.85%) on Friday to close at 30,160.65, supported by strong trading volumes that signaled sustained investor confidence and reinforced the ongoing bullish momentum. Technically, the index maintains a constructive structure, continuing to trade comfortably above its 50-period Simple Moving Average (SMA), which remains a key dynamic support level. Momentum conditions also remain positive, with the 14-period RSI at 50.46, indicating steady buying interest without signs of overextension. The index is currently testing an important support zone around 30,100. Holding above this level will be crucial to preserve market confidence and maintain the broader uptrend. However, a decisive break below 30,100 may suggest short-term bullish fatigue, opening the door to a pullback toward 30,000 and potentially 29,800 both of which represent meaningful secondary support levels that could cushion deeper downside risk.