Canadian stocks sheds value modestly on Friday

Source: Krish Capital Pty Ltd

Index Update:

After opening just lower than yesterday's close, the benchmark S&P/TSX Composite Index fell to an intraday low of 29,254.37 in the early afternoon. The index subsequently managed to regain some ground before closing at 29,283.82, down by 124.07 points (or 0.42%).

Macro Update:

The government's upcoming budget is expected to carry a slew of austerity measures across all departments.

Earlier this month, Carney launched a $3.6 billion fund to support tariff-hit industries. Carney had also ordered the public sector to "Buy Canadian" in order to cut off the nation's reliance on the US solely as a trade partner.

Data released by Statistics Canada today revealed that Canadian industrial capacity utilization, declined to 79.3% in Q2 of this year from a downwardly revised 79.9% from Q1 of 2025.

In the US, CPI and PPI numbers released this week along with job numbers hinted at an increasing possibility for a rate cut at the Federal Reserve's monetary policy meeting next week.

The labor force survey for August showed Canada lost nearly 66,000 jobs. In addition, a contraction of 1.6% in economic activity was observed in the last quarter’s data.

Top Movers:

Among the individual stocks, Sienna Senior Living Inc (1.22%), Capital Power Corp (2.44%), Brookfield Renewable (1.18%), and Nuvista Energy (3.03%) were the prominent gainers.

Our Stance:

The index is currently hovering around a key support area near 29,000. Holding above this level will be crucial for maintaining investor confidence and sustaining the broader uptrend. Conversely, a clear break below 29,000 could signal fading bullish momentum and open the door to a short-term pullback, with 28,700 and 28,500 serving as the next immediate support levels to cushion against further downside.

Commodity Update:

The dollar remained steady on Monday ahead of key central bank decisions, led by the Federal Reserve. The euro showed little reaction to Fitch’s downgrade of France’s credit rating. In commodities, gold slipped 0.21% to $3,678.90, silver eased 0.02% to $42.82, while copper edged up 0.25% to $10,097.25. Brent crude dipped 0.01% to $67.02 as markets weighed Ukrainian drone strikes on Russian refineries and U.S. fuel demand growth.

Technical Update:

On Friday, the S&P/TSX Composite Index declined by 124.07 points, or 0.42%, to close at 29,283.82. From a technical standpoint, the index continues to exhibit a firmly bullish structure, holding comfortably above the 21-period Simple Moving Average (SMA), a closely watched short-term trend indicator that remains a key dynamic support. Momentum readings also underscore strong buying interest, with the Relative Strength Index (RSI) at 77.01. While this places the index in overbought territory, it also highlights the strength of the ongoing rally, which may extend further before any meaningful correction emerges. Currently, the index is testing a critical support zone near 29,000. Sustained price action above this level will be pivotal in reinforcing market confidence and preserving the broader uptrend. However, a decisive breakdown below 29,000 could point to short-term exhaustion of bullish momentum, potentially triggering a pullback toward the next immediate support levels at 28,700 and 28,500, which may act as buffers against deeper declines.