Canadian stocks slumped heavily on Tuesday

Index Update:  Canadian stocks slumped heavily on Tuesday as investor focus shifted to today's federal budget as expectations of another rate cut by the central bank slowly diminish. After opening below yesterday's close, the benchmark S&P/TSX Composite Index traded firmly negative throughout the session before finally closing at 29,777.82, down by 497.24 points (or 1.64%).

Macro Update:  data released by S&P Global revealed that Canada's Manufacturing PMI rose to 49.6 in October from 47.7 in September, indicating a somewhat slower contraction. It also revealed that both output and new orders fell at much weaker rates, with new orders slipping to their weakest pace in 2025. Yesterday, BoC Governor Tiff Macklem stated that the rate is now at the low end of the central bank's neutral range. However, he refrained from making any policy recommendation that he would like to see in the federal budget.

Top Movers:  Among the individual stocks, Empire Company Ltd (1.33%), Loblaw CO (1.17%), George Weston Limited (1.14%), The North West Company Inc (0.44%), and Jamieson Wellness Inc (0.35%) were the prominent gainers.

Our Stance:  On the downside, immediate support is situated around 29,600, which will be important for bulls to defend. A decisive break below this level could trigger a deeper correction toward 29,500 and 29,400, whereas sustained closes above it would help preserve the current bullish bias and keep the near-term outlook intact.

Commodity Update:  The U.S. dollar strengthened on Wednesday amid a tech-led selloff on Wall Street that spread to Asia and divisions within the Federal Reserve, lowering chances of a December rate cut. Gold edged up 0.05% to USD 3,962.20 per ounce, while silver dipped 0.02% to USD 47.28, and copper rose 0.05% to USD 10,661. Brent crude fell 0.56% to USD 64.08 on demand concerns and rising U.S. inventories.

Technical Update:

The S&P/TSX Composite Index declined 497.24 points (−1.64%) on Tuesday to close at 29,777.82, as mild profit-taking weighed on overall sentiment. Despite this pullback, the broader technical outlook remains constructive, with the index continuing to trade comfortably above its 50-period Simple Moving Average (SMA). This key moving average acts as a dynamic support level, reinforcing the prevailing short-term uptrend and indicating that buyers continue to maintain control. Momentum indicators also highlight underlying resilience, with the 14-period Relative Strength Index (RSI) holding near 44.74, reflecting stable momentum within a neutral-to-positive range. On the downside, immediate support is situated around 29,600, which will be important for bulls to defend. A decisive break below this level could trigger a deeper correction toward 29,500 and 29,400, whereas sustained closes above it would help preserve the current bullish bias and keep the near-term outlook intact.