Canadian stocks slumped on Thursday

Index Update:  Canadian stocks slumped on Thursday, reversing the gains made earlier in the session, triggered by yesterday's Nvidia's stellar earnings, as investors chose to book profits. After opening above yesterday's close, the benchmark S&P/TSX Composite Index quickly gave back and traded lower for the rest of the session before settling at 29,906.55, down by 371.86 points (or 1.23%)

Macro Update:  In the U.S. the non-farm payrolls data was released by the Bureau of Labor Statistics. The report showed employment rose by 119,000 jobs in September, against expected 50,000 rebounding from a revised 4,000 decline in August; the biggest increase in five months. This report was scheduled to be released on October 3 but got delayed due to the recent government shutdown. The unemployment rate ticked up to 4.4% in September from 4.3% in August. Despite a rise in unemployment, as the decent NFP numbers went against rate cut expectations, investors' attention turned away from the Fed. Currently, the CME Group's FedWatch Tool is indicating a 39.8% chance of a 25-basis-point rate cut in the December 9-10 meeting of the U.S. Federal Reserve.  Data released by Statistics Canada today revealed that Canadian industrial producer prices rose 1.5% month-over-month in October and increased 6.0% year-on-year.

Top Movers:  Among the individual stocks, Metro Inc (1.55%), Loblaw CO (1.37%), Alimentation Couche-Tard Inc (1.19%), and Canada Packers Inc (1.17%) were the prominent gainers.

Our Stance: The index is currently testing a critical support level near 26,800. Holding above this zone will be essential for preserving the broader upward bias and potentially laying the groundwork for a renewed rally. However, a decisive breakdown below this support could open the door to additional downside pressure, with the next key support levels positioned between 26,600 and 25,500.

Commodity Update:  The dollar headed for its strongest weekly gain in over a month as traders bet the Fed won’t cut rates next month, with a mixed U.S. jobs report offering little clarity. Gold slipped 0.09% to USD 4,056.40, silver fell 1.32% to USD 49.63, and copper eased 0.26% to USD 10,700. Brent crude dropped 1.12% to USD 62.67 amid U.S. efforts toward a Russia-Ukraine peace deal and caution over rate-cut uncertainty.

Technical Update: 

On Thursday, the S&P/TSX Composite Index closed at 29,906.55, marking a 1.23% decline. The index continues to trade below its 21-period Simple Moving Average (SMA), reinforcing the continuation of the short-term bearish trend. Meanwhile, the Relative Strength Index (RSI) sits at 46.27, indicating a neutral momentum environment without clear overbought or oversold conditions. The index is currently testing a critical support level near 26,800. Holding above this zone will be essential for preserving the broader upward bias and potentially laying the groundwork for a renewed rally. However, a decisive breakdown below this support could open the door to additional downside pressure, with the next key support levels positioned between 26,600 and 25,500.