Canadian Stocks Slip from Record Peak

Image Source : Krish Capital Pty Ltd

Index Update:  Canadian stocks pulled back on Tuesday as investors resorted to profit-taking with no fresh detail on a Canada-US trade agreement coming up to boost sentiment. The benchmark S&P/TSX Composite Index hit an intra-day high of 27,239.48 within minutes. However, it soon fell, travelled in the negative territory for the remainder of the trading session, and settled at 27,054.14, down by 144.71 (or 0.53 %).

Macro Update:  The annual inflation rate in Canada rose to 1.9% in June from 1.7% in May. While inflation has risen for durable goods, passenger vehicles, and furniture, it slowed for food and shelter. The CPI Median increased to 3.10% in June from 3% in May. The trimmed-mean core CPI that the Bank of Canada considers for gauging inflation was unchanged at 3%. The annual core inflation rate in Canada rose to 2.7% in June from 2.5% in May. Economists are of the opinion that the central bank is likely to hold the interest rates steady this month in the backdrop of the above data.

Top Movers:  Northland Power Inc (1.79%), AltaGas Ltd (1.34%), BCE Inc (0.98%), and Rogers Communications (0.77%). were the prominent gainers.

Our Stance:  From a technical perspective, the index is currently holding above the near-term support zone at 26,800 a critical threshold for preserving bullish momentum. If this level holds, it could prompt renewed buying interest and set the stage for a potential rebound toward recent highs. However, a clear break below 26,800 may increase selling pressure, potentially signaling a deeper correction ahead.

Commodity Update:  On Wednesday, the U.S. dollar and Treasury yields rose, pressuring the yen as U.S. inflation data showed the impact of the tariff. Gold dipped 0.01% to $3335.40, silver fell 0.12% to $38.06, and copper eased 0.01% to $9639.00. Brent crude, however, climbed 0.42% to $69.00, driven by expectations of stable demand in the U.S. and China amidst an improving economic outlook.

Technical Update: 

On Tuesday, the S&P/TSX Composite Index saw a retreat, slipping 144.71 points, or roughly 0.53%, to close at 27,054.14. Despite the pullback, the index remains comfortably positioned above its 50-period Simple Moving Average (SMA), a key technical indicator that often acts as dynamic support in trending markets. This suggests that the short-term uptrend is still intact, and the recent dip may represent a healthy consolidation rather than the start of a broader reversal. From a technical standpoint, the focus now shifts to key support levels. The index is currently holding above the near-term support zone at 26,800 a critical threshold for preserving bullish momentum. If this level holds, it could prompt renewed buying interest and set the stage for a potential rebound toward recent highs. However, a clear break below 26,800 may increase selling pressure, potentially signaling a deeper correction ahead.