Canadian stocks soared on Wednesday

Index Update: Canadian stocks soared on Wednesday, rebounding from yesterday's decline, as an increase in gold prices pushed up the materials sector stocks, which took the market up with it even as investors assessed yesterday's federal budget in light of the slowdown in the economy. After opening above yesterday's close, the benchmark S&P/TSX Composite Index traded firmly positive throughout the session before finally settling at 30,103.48, up by 325.66 points (or 1.09%).

Macro Update: Carney's budget reveals a deficit of $78.3 billion and calls for $141-billion in new spending over the next five years. It also proposes $51.2-billion in cuts and savings including slashing of tens of thousands of public service jobs. Analysts feel that the budget may not be sufficient to offer the expected fiscal stimulus and predict that the Bank of Canada may cut interest rates further. On October 29, the central bank cut interest rates to 2.25%. The U.S. ADP employment report released today revealed that private businesses added 42,000 jobs in October rebounding after an upwardly revised 29,000 jobs cut in September. For the month of October, while the S&P Global Canada Composite PMI recorded 50.3 (up from 46.3 in September), the Services PMI rose to 50.5 (up from 46.3 in September).

Top Movers: Among the individual stocks, Kelt Exploration Ltd (8.19%), Suncor Energy Inc (4.53%), Nuvista Energy Ltd (4.08%), Bitfarms Ltd (6.48%), Iamgold Corp (8.87%), Kinross Gold Corp (7.33%), and G Mining Ventures Corp (6.60%) were the prominent gainers.

Our Stance: Momentum remains steady, as the 14-day RSI hovers near 51.00, reflecting neutral-to-positive sentiment. Immediate support lies at 29,600, with further downside targets at 29,500 and 29,400. Sustained closes above these levels would maintain the bullish bias and keep the near-term outlook positive.

Commodity Update: The dollar held near a three-month high on Thursday as markets reduced bets on a December rate cut by the Federal Reserve. Gold dipped 0.03% to USD 3,991.80 per ounce, silver declined 0.35% to USD 47.85, while copper rose 0.32% to USD 10,759.00. Brent crude inched up 0.03% to USD 63.54, recovering slightly after recent losses amid weak demand and persistent global oversupply concerns.

Technical Update:

The S&P/TSX Composite Index climbed 325.66 points, or 1.09%, on Wednesday to close at 30,103.48, rebounding from its 50-day Simple Moving Average (SMA). Despite the recent rise, the broader technical outlook remains constructive, with the index holding comfortably above this key support level, reinforcing the short-term uptrend and buyer dominance. Momentum remains steady, as the 14-day RSI hovers near 51.00, reflecting neutral-to-positive sentiment. Immediate support lies at 29,600, with further downside targets at 29,500 and 29,400. Sustained closes above these levels would maintain the bullish bias and keep the near-term outlook positive.