Canadian stocks slipped on Monday

index Update:

Canadian stocks declined on Monday as stalled U.S.–Iran peace efforts and Iran’s refusal to participate in negotiations following Israeli attacks in Lebanon heightened geopolitical tensions, while the continued blockage of the Strait of Hormuz disrupted oil and energy trade.

After opening a little lower than Friday's close, today the benchmark S&P/TSX Composite  Index lost momentum early in the session. Despite managing to gain ground briefly, it fell again and traded lower to settle at 34,734.89, down by 34.25 points (or 0.10%).

Macro Update:

Despite a ceasefire proclaimed early in April to facilitate dialogue, a peace deal to end the U.S.-Israel versus Iran war remains elusive.

Last week, both nations engaged in a short skirmish in the Middle East, raising concerns of disruption to the peace talks.

However, Axios reported that a Memorandum of Understanding has been achieved with provisions to extend the ceasefire for a 60-day period during which negotiations on Iran's nuclear ambitions will take place.

Data released by S&P Global revealed that Canada's Manufacturing Purchasing Managers' Index stayed at 52.90 in May, slightly down from 53.30 in April.

Friday's Gross Domestic Product data technically indicated a Recession.

With the review of Canada-United States-Mexico Agreement on Free Trade one month away, both nations are yet to reach an agreement.

Top Movers:

Among the individual stocks, Coveo Solutions Inc (15.42%), Celestica Inc (10.36%), Docebo Inc (10.21%), Blackberry Limited (8.74%), Parex Resources Inc (10.27%), and Vermilion Energy Inc (6.05%) were the prominent gainers.

Our Stance:

The key support is located around the 34,600 level, and a sustained break below this area could lead to a period of short-term consolidation, potentially exposing the 34,300 region. On the upside, a decisive breakout above the 34,900 resistance zone would strengthen bullish sentiment and could open the door for a move towards the 35,100 level in the near term.

Commodity Update:  

The U.S. dollar remained steady on Tuesday as investors adopted a cautious stance amid ongoing Middle East peace discussions. Lebanon announced a limited ceasefire between Hezbollah and Israel, offering some relief to regional tensions, though broader geopolitical risks continued to weigh on market sentiment. Gold rose 0.26% to USD 4,518.10, silver gained 0.37% to USD 75.62, and copper advanced 0.43% to USD 13,878.90. Meanwhile, Brent Crude slipped 0.40% to USD 94.58 as the Strait of Hormuz remained closed, maintaining uncertainty over global energy Supply routes.

Technical Update:

The S&P/TSX Composite Index closed near 34,734.89 on Monday while remaining above its 21-day Simple Moving Average (SMA) near 34,204.20, reflecting a positive near-term technical structure. Momentum indicators also remained constructive, with the 14-day Relative Strength Index (RSI) near 60.37, indicating relatively firm momentum conditions while remaining below overbought territory. Immediate support is seen around 34,387.00 and 34,040.00, while resistance is observed near 35,082.00 and 35,429.00. A sustained move above the resistance zone could reinforce the prevailing trend, while a break below support may lead to a period of consolidation in the near term.