The Canadian market ended on fresh highs

Image Souce: Krish Capital Pty Ltd

Index Update: The Canadian market climbed to a new record high on Thursday, lifted by gains in energy and materials sectors. The benchmark S&P/TSX Composite Index, which dropped to 24,134.87 after opening with a negative gap of nearly 50 points at 24,176.40, climbed to a new high at 24,315.49 before settling at 24,302.26 with a gain of 77.36 points or 0.32%.

Macro Update: Income inequality increased in the second quarter of 2024 as the gap in the share of disposable income between households in the top 40% and the bottom 40% of the income distribution reached 47.0 percentage points, the largest gap ever recorded.

Persistently high interest rates over the course of the 12 months ending in the second quarter of 2024 had varying impacts on household finances, depending on level of income. While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. Lower income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment

Top Movers: K92 Mining Inc (KNT.TO) soared nearly 17%. Orla Mining (OLA.TO), Torex Gold Resources (TXG.TO), Calibre Mining (CXB.TO) and Iamgold (IMG.TO) climbed 7 to 9.4%.

Our Stance: The index is comfortably above its 21-period Simple Moving Average (SMA), signaling a bullish trend. The Relative Strength Index (RSI) is at 70.96, indicating that the market is healthy, allowing room for further upside. Currently, the index is testing a crucial support level of around 23,650.

Commodity Update: On Friday in Asian trade, the U.S. dollar retreated from two-month highs against major currencies as signs of labour market weakness bolstered expectations for quicker Federal Reserve rate cuts. Despite this decline, the dollar remained on track for its second consecutive weekly gain, supported by strong payroll figures that ruled out a half-percentage-point cut at the next Fed meeting. In commodities, gold rose 1.31% to $2,660.30 per ounce, silver increased 2.69% to $31.48, and copper gained 0.70% to $9,756.00 per ton. Meanwhile, Brent crude fell 0.5% to $79.01 a barrel amid concerns over hurricane damage and escalating geopolitical tensions affecting U.S. demand.

Technical Update: On Thursday, the S&P/TSX Composite Index rose by 77.36 points, closing at 24,302.26 a 0.32% increase reflecting strong investor confidence and robust trading activity. The energy sector played a significant role in this uptick, gaining 2.22%, fueled by optimism in energy stocks. From a technical perspective, the index is comfortably above its 21-period Simple Moving Average (SMA), signalling a bullish trend. The Relative Strength Index (RSI) is at 70.96, indicating that the market is healthy, allowing room for further upside. Currently, the index is testing a crucial support level of around 23,650. Maintaining this support is vital for sustaining upward momentum; a fall below could trigger a pullback, with key support levels identified between 23,200 and 22,600. For continued growth, it is essential for the index to remain above these levels.