Canadian Stocks Slide Amid Interest Rate Decisions By BoC

Index Update:  Canadian stocks declined on Wednesday, extending losses for a third straight session as concerns over the Strait of Hormuz closure weighed on sentiment, while investors assessed recent interest rate decisions from the Bank of Canada and the U.S. Federal Reserve.

After opening a little lower than yesterday's close, the benchmark S&P/TSX Composite Index traded firmly negative before settling at 33,318.39, down by 265.95 points (or 0.79%).

Macro Update: In the U.S., the Federal Reserve kept its benchmark interest rates unchanged (in the 3.50% to 3.75% range) owing to rising inflation.

In Canada, holding a hawkish stance, the Bank of Canada held its target for the overnight rate at 2.25%, with the bank rate at 2.50% and the deposit rate at 2.20%.

Amid unclear geopolitical conditions, the BoC refrained from offering a precise clue on future interest rates.

The Canadian economy is facing challenges due to increasing oil prices following the gulf war and the uncertainty surrounding the U.S. trade policies with other nations.

The central bank's quarterly forecast anticipates inflation to peak in April at around 3.00% and assumes a fall in crude oil prices to $75 per barrel by the middle of next year.

The revised forecasts by the BoC predicts a GDP growth rate at 1.20% this year and at 1.70%, next year.

Top Movers:  Among the individual stocks, Goeasy Ltd (5.74%), Strathcona Resources Ltd (5.73%), Parex Resources Inc (5.33%), Cenovus Energy Inc (4.85%), Enerflex Ltd (3.92%), Blackberry Limited (4.84%), and Celestica Inc (4.45%) were the prominent gainers.

Our Stance:  The index is not in oversold territory, the lack of strong buying interest suggests limited near-term recovery potential. Immediate support is placed near 33,200; a sustained break below this level could weaken sentiment further and potentially trigger a deeper pullback toward the 32,900 zone.

Commodity Update:   The U.S. dollar hovered near a two-week high on Thursday as hawkish remarks from Federal Reserve officials pushed bond yields to a one-month peak. The Japanese yen weakened past 160 per dollar, increasing the likelihood of potential intervention. Gold rose 0.28% to USD 4,574.60, silver gained 0.86% to USD 72.70, and copper advanced 0.45% to USD 13,053.00. Brent crude declined 1.91% to USD 119.94 amid concerns over prolonged Middle East supply disruptions due to stalled U.S.-Iran tensions.

Technical Update: 

On Wednesday, the S&P/TSX Composite Index declined by 265.95 points (0.79%) to close at 33,318.39, reflecting a mildly negative tone rather than outright weakness. From a technical standpoint, the index continues to trade below its 21-period Simple Moving Average (SMA), which is acting as dynamic resistance and capping upside attempts. Momentum remains subdued, with the 14-period RSI near 46.41, indicating lingering bearish conditions. While the index is not in oversold territory, the lack of strong buying interest suggests limited near-term recovery potential. Immediate support is placed near 33,200; a sustained break below this level could weaken sentiment further and potentially trigger a deeper pullback toward the 32,900 zone.