Image Source : Krish Capital Pty Ltd

Index Update: The benchmark S&P/TSX Composite Index ended down 215.28 points or 0.84% at 25,483.23, slightly off the day's low of 25,470.77. The index gained a marginal 0.14% in the week.

Macro Update: On the economic front, manufacturing sales in Canada rose 0.3% month-over-month in December 2024, slower than initial estimates of 0.6%, and following a revised 0.7% increase in the prior month, data from Statistics Canada showed.

Meanwhile, wholesale sales in Canada fell 0.2% month-over-month in December 2024, matching the 0.2% decline in November.

Top Movers: CAE Inc (CAE.TO), Interfor Corporation (IFP.TO), goeasy (GSY.TO), Velen In (VLN.TO), Bombardier Inc (BBD.B.TO), Russel Metals (RUS.TO) and Cogeco Inc (CYG.TO) closed with sharp gains.

Our Stance: Despite the decline, the index remains above its 50-period Simple Moving Average (SMA), suggesting that the broader uptrend is still intact. Looking ahead, 25,200 serves as a critical support level holding above it could signal a potential rebound. A break below this level, however, may accelerate selling pressure, with 25,000 and 24,800 emerging as the next downside targets.

Commodity Update: The U.S. dollar remained near two-month lows on Tuesday, as traders evaluated tariff concerns and the potential for U.S. rate cuts. Meanwhile, the Australian dollar stayed near its highest level in two months despite market expectations of an imminent rate cut. Investor focus shifted to Wednesday's release of the Federal Reserve's January meeting minutes, to assess how policymakers are addressing risks of a broader tariff war linked to President Trump's trade policies. In commodities, gold rose 0.34% to $2921.15, silver climbed 0.11% to $32.91, and copper increased 0.02% to $9399.95. Brent oil fell 0.20% to $75.10 amid a Ukrainian drone attack and concerns over OPEC+ output plans.

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Technical Update: The S&P/TSX Composite Index closed at 25,483.23, down 0.84%, as market volatility persists. The energy sector’s 1.03% drop was a key drag, potentially weighing on investor sentiment. Despite the decline, the index remains above its 50-period Simple Moving Average (SMA), suggesting that the broader uptrend is still intact. Looking ahead, 25,200 serves as a critical support level holding above it could signal a potential rebound. A break below this level, however, may accelerate selling pressure, with 25,000 and 24,800 emerging as the next downside targets. Market participants will be watching these levels closely to gauge whether the current pullback is a buying opportunity or the start of a deeper correction.

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