Canadian Stocks Rise Amid Fed Rate Cut Hopes

Image Source : Krish Capital Pty Ltd

Index Update:  After opening just above previous close, the benchmark S&P/TSX Composite Index moved up to reach an intraday high of 28,063.73 within an hour. However, it gave back ground to finally settle at 27,993.43, up by 72.17 points (or 0.26%). This is still a fresh record for the index.

Macro Update:  Days before, China had announced 75.8% tariffs, which will be effective from tomorrow, on Canadian canola imports. China has also launched an anti-dumping investigation into Canadian pea starch into the country. These moves put additional pressure on the Canadian government to sort out trade friction with China. Meanwhile, the minutes of the latest meeting of the Canada's central bank published today reveals that ahead of the July 30 interest rate decision, BoC officials appeared divided on rate cuts. The benchmark interest rate now hovers around 2.75%. On the external front, in the US, the soft inflation data this week and weaker jobs data from last week has triggered expectations among traders of a rate cut by the US Fed earlier in September.

Top Movers: Among the individual stocks, Gildan Activewear Inc (11.78%), BCE Inc (2.25%), Altus Group Ltd (4.80%), and Toronto-Dominion Bank (1.61%) were the prominent gainers. Hudbay Minerals Inc (14.81%) and Boyd Group Services Inc (10.87%) were among the prime market-moving stocks today.

Our Stance: The Relative Strength Index (RSI) stands at 67.47, reflecting strong momentum. The index is currently testing key support near 27,700; holding this level is crucial to maintaining the bullish trend. A break below could trigger a pullback toward 27,600 and 27,400, while sustained trade above these levels will be essential to preserving upward momentum in the sessions ahead.

Commodity Update: The U.S. dollar hovered near multi-week lows Thursday as traders increased bets on a Federal Reserve rate cut next month. Gold rose 0.18% to $3,414.50, silver gained 0.42% to $38.76, and copper inched up 0.19% to $9,827.40. Brent crude climbed 0.43% to $65.91, rebounding from the prior session’s sell-off, with the upcoming Trump–Putin meeting adding risk premiums to the market.

Technical Update:

On Wednesday, the S&P/TSX Composite Index advanced 72.17 points to close at 27,993.43, a gain of 0.20%. The rise, supported by strong trading volumes, was led by the consumer cyclicals sector, which jumped 2.07%. Technically, the index remains comfortably above its 21-period Simple Moving Average (SMA), reinforcing a positive short-term bias. The Relative Strength Index (RSI) stands at 67.47, reflecting strong momentum. The index is currently testing key support near 27,700; holding this level is crucial to maintaining the bullish trend. A break below could trigger a pullback toward 27,600 and 27,400, while sustained trade above these levels will be essential to preserving upward momentum in the sessions ahead.