Canadian stocks surged on Tuesday Amid Rising Optimism On Fed Rate Cuts

Image Source : Krish Capital Pty Ltd

Index Update:  Canadian stocks surged on Tuesday amid increased investor optimism about a US Fed rate cut. After opening much higher than the previous close, the benchmark S&P/TSX Composite Index remained firmly positive throughout the day before settling at 27,570.08, up by 549.65 points (or 2.03%). This is a fresh record for the index.

Macro Update:  On Sunday, Canada's federal minister in-charge of US-Canada trade talks stated that he sees a pathway to reduce US tariffs imposed on Canada. To ease the relations more, without imposing any retaliatory tariffs, Canada has allowed a majority of US goods to now enter tariff-free into Canada. data released by Statistics Canada revealed a seasonally adjusted trade deficit of C$5.9 billion in June, widening from the revised C$5.5 billion of May. Imports expanded by 1.4%. Exports to the US which have been subject to "sector-specific tariffs" were 3.1% higher than May.

Top Movers:  Among the individual stocks, Kinross Gold Corp (11.99%), Eldorado Gold (9.24%), Shopify Inc (7.05%), Coveo Solutions Inc (5.73%), and Bausch Health Companies (3.93%) were the prominent gainers.

Our Stance:  The index is currently hovering near a key support zone at 27,300, a level that must hold to sustain the prevailing uptrend. A decisive break down below this threshold could trigger a corrective move toward subsequent support levels at 27,000 and 26,800. Continued price action above these levels will be crucial to maintain bullish momentum in the sessions ahead.

Commodity Update:  The dollar remained rangebound on Wednesday as investors awaited U.S. President Donald Trump's nominee for the Federal Reserve Board. Gold dipped 0.09% to $3,431.60, while silver inched up 0.02% to $37.83. Copper rose 0.17% to $9,660.80. Brent crude rebounded 0.40% to $66.93 from a five-week low, supported by concerns over supply disruptions following Trump’s tariff threats on India for its Russian oil imports.

Technical Update: 

On Tuesday, the S&P/TSX Composite Index surged 549.65 points, or 2.03%, to settle at 27,570.08, signaling robust investor confidence amid elevated trading volumes. The basic materials sector spearheaded the rally with a sharp 5.58% gain. From a technical standpoint, the index remains well-positioned above its 21-period Simple Moving Average (SMA), reinforcing a bullish near-term bias. The Relative Strength Index (RSI) stands at 61.97, indicating strong upward momentum. The index is currently hovering near a key support zone at 27,300, a level that must hold to sustain the prevailing uptrend. A decisive breakdown below this threshold could trigger a corrective move toward subsequent support levels at 27,000 and 26,800. Continued price action above these levels will be crucial to maintain bullish momentum in the sessions ahead.