Canadian stocks rebounded sharply

index Update:

Canadian equities rebounded sharply on Thursday after the previous session’s decline, driven by growing optimism over easing tensions in the Middle East. Investor sentiment improved following Israel and Lebanon’s agreement to renew a ceasefire, while the U.S. and Iran confirmed that diplomatic talks aimed at resolving hostilities would continue.

After opening above yesterday's close, today the benchmark S&P/TSX Composite  Index gained momentum and traded firmly positive to reach a new record intraday high of 35,291.13 before settling at 35,217.06, up by 415.52 points (or 1.19%).

Macro Update:

After the fourth round of negotiations held in Washington on June 2 and 3 (mediated by the U.S.), both countries agreed to end hostilities along the Israel-Lebanon border and clear the way for broader security and peace.

The deal calls for complete cessation of Hezbollah's firings and complete evacuation of the militant group from south of the Litani River.

On Tuesday, during a U.S. Senate hearing, U.S. Secretary of State Marco Rubio asserted that reopening of the Strait of Hormuz would not entitle Iran to get sanctions relief. Optimistically Trump stated that the Strait of Hormuz will reopen immediately after the signing of a Memorandum of Understanding.

The Bank of Canada's Monetary Policy announcement is scheduled for June 10. The policy rate currently stands at 2.25%.

Amid two consecutive quarters of contraction in the economy and a soft labor market underscoring ongoing weakness due to geopolitical tensions, economists are of the view that the Central Bank would leave the rates unchanged.

Top Movers:

Among the individual stocks, Curaleaf Holdings Inc (7.19%), Bausch Health Companies Inc (5.94%), Constellation Software Inc (5.50%), TMX Group Limited (3.55%), Brookfield Asset Management Ltd (3.28%), and Franco-Nevada Corporation (2.95%) were the prominent gainers.

Our Stance:

The momentum indicators also remain favourable, with the 14-day Relative Strength Index (RSI) at 63.45, signalling solid buying interest while remaining below overbought territory and leaving room for further upside. Immediate support is located near the 35,100 level, with a break below this area potentially leading to short-term consolidation toward 34,800. On the upside, a sustained move above 35,300 could confirm continued strength and support an advance toward 35,500 in the near term. 

Commodity Update:

Global commodity markets traded mixed on Friday as improving risk sentiment weighed on the U.S. dollar following a ceasefire agreement between Israel and Lebanon, raising hopes for broader diplomatic progress in the Middle East. Gold gained 0.77% to USD 4,502.90 per ounce, while silver advanced 0.17% to USD 73.82 per ounce. Copper edged down 0.06% to USD 13,788.90 per tonne. Brent Crude oil rose 0.30% to USD 95.29 per barrel after Hezbollah rejected the ceasefire, maintaining geopolitical concerns.

Technical Update:

The S&P/TSX Composite Index climbed 415.52 points, or 1.19%, to finish at 35,217.06, extending its positive momentum and reinforcing the broader upward trend. From a technical perspective, the index continues to trade above its 21-day Simple Moving Average (SMA), which remains an important dynamic support level and highlights the strength of the prevailing bullish structure. Momentum indicators also remain favourable, with the 14-day Relative Strength Index (RSI) at 63.45, signalling solid buying interest while remaining below overbought territory and leaving room for further upside. Immediate support is located near the 35,100 level, with a break below this area potentially leading to short-term consolidation toward 34,800. On the upside, a sustained move above 35,300 could confirm continued strength and support an advance toward 35,500 in the near term.