Canadian Stocks Slump Amid Profit Taking

Index Update: Canadian stocks tumbled on Tuesday as traders resorted to profit taking from yesterday's gains as investors assessed the latest inflation report, which deflated expectations of a rate cut by the Canadian central bank. After opening far below yesterday's close, the benchmark S&P/TSX Composite Index traded firmly negative throughout the session before finally settling at 29,888.82 down by 527.62 points (or 1.73%).

Macro Update: data released by Statistics Canada today revealed that for the month of September, the year-on-year annual inflation rate in Canada rose to 2.4% from 1.9% in the previous month. For the same month, the CPI edged up 0.1% month-on-month, rebounding from a 0.1% decline in August. Canada's annual core CPI measure, which is the Bank of Canada's favorite yardstick of inflation, increased to 2.8% in September from 2.6% in August, while month-on-month, it increased 0.2% in September. For September, Canada's annual CPI median remained unchanged at 3.2% though annual CPI trimmed-mean increased by 3.1%. In the backdrop of this report, investors' expectations that the Bank of Canada will trim the interest rate by 25 basis points to 2.25% at its upcoming meeting on October 29 still remains though not as high as before.

Top Movers: Among the individual stocks, Choice Properties REIT (1.21%), Colliers International Group Inc (1.19%), Rogers Communication Inc (1.01%), and Magna International (3.02%) were the prominent gainers.

Our Stance: The Relative Strength Index (RSI) stands at 49.75, reflecting steady underlying strength. On the downside, immediate support is located near 29,700, a key level for bulls to defend. A decisive break below this zone could open the door to further retracements toward 29,600 and 29,500.

Commodity Update: The U.S. dollar slipped in early Asian trade on Wednesday, retreating from a one-week high against the yen as a rebound in gold prices prompted portfolio rebalancing among safe-haven assets. Gold rose 0.44% to USD 4,126.59 per ounce, silver gained 1.00% to USD 48.18, and copper edged up 0.03% to USD 10,614.60. Brent crude climbed 0.29% to USD 61.50 amid supply risks, trade optimism, and U.S. reserve purchases.

Technical Update:

The S&P/TSX Composite Index fell 527.62 points (−1.73%) in Tuesday’s session to close at 29,888.82, as mild profit-taking weighed on sentiment. Despite the pullback, the broader technical outlook remains constructive. From a trend perspective, the index continues to trade well above its 50-period Simple Moving Average (SMA), which acts as dynamic support and reinforces the prevailing short-term uptrend. Sustained closes above this level suggest that buying momentum remains intact despite near-term volatility. The Relative Strength Index (RSI) stands at 49.75, reflecting steady underlying strength. On the downside, immediate support is located near 29,700, a key level for bulls to defend. A decisive break below this zone could open the door to further retracements toward 29,600 and 29,500.