Canadian stocks posted modest gains on Wednesday

Source: Krish Capital Pty Ltd

Index Update:

After opening just above yesterday's closing, the benchmark S&P/TSX Composite Index fluctuated over the course of the session before closing at 28,751.36 up by 135.74 points (or 0.47%).

Macro Update:

The trade war resulted in sharp economic contraction in the second quarter, with real GDP falling 1.6% on an annualized basis. However, consumer inflation remains relatively low at 1.7% year-over-year in July.

Data released by Statistics Canada today revealed that labor productivity fell 1.0% in the second quarter following a revised 0.1% decrease in the first quarter.

Canada's overall inflation rate remains below the Bank of Canada's 2% goal. Hence, the odds of a rate cut at the upcoming September 17 BoC's meeting looks less likely.

Top Movers:

Among the individual stocks, Alimentation Couche-Tard Inc (6.27%), Quarterhill Inc (6.50%), Celestica Inc Sv (5.84%), First Quantum Minerals Ltd (5.74%), and Capstone Mining Corp (4.04%) were the prominent gainers.

Our Stance:

The index is currently testing a key support zone near 28,500. A sustained hold above this level is critical to preserving the ongoing upward trajectory. However, a decisive break below 28,500 could pave the way for a deeper retracement, with additional support levels located around 28,200 and 28,000. Maintaining these supports will be essential to keeping the near-term bullish outlook intact.

Commodity Update:

The U.S. dollar eased Thursday amid bond market jitters and weak labour data, bolstering expectations of a Fed rate cut this month. Commodities traded lower, with gold down 1.06% at $3,597.30, silver off 1.82% at $41.29, and copper easing to $9,932.70. Brent crude slipped 0.40% to $67.35, pressured by reports of a potential OPEC+ output hike and rising U.S. oil inventories, raising concerns over softer fuel demand.

Technical Update:

On Friday, the S&P/TSX Composite Index gained 129.65 points, or 0.46%, to close at 28,564.45, supported by strong trading volumes. The healthcare sector led the advance with a 2.49% rise. From a technical perspective, the index remains comfortably above its 21-period Simple Moving Average (SMA), reinforcing a constructive short-term outlook. The Relative Strength Index (RSI) at 66.18 reflects solid bullish momentum. Currently, the index is testing key support near 28,300. Sustaining this level will be critical to maintaining the ongoing uptrend, while a breakdown could open the door to a pullback toward 28,000 and 27,800. On the upside, holding these support zones above will be essential for preserving momentum and paving the way for further gains in the sessions ahead.