The Canadian market ended sharply lower on Friday

Image Source : Krish Capital Pty Ltd

Index Update: The benchmark S&P/TSX Composite Index ended with a loss of 367.05 points or 1.44% at 25,147.03, slightly off the day's low of 25,126.74. The index shed about 1.2% in the week.

Macro Update: On the economic front, retail sales in Canada are expected to ease by 0.4% from the previous month in January of 2025, the first drop in seven months, according to preliminary estimates. That follows a 2.5% surge in the final month of 2024, revised higher from the preliminary estimate of 1.6%, to mark the sharpest rise in retail turnover since May of 2022.

Top Movers: Tilray surged nearly 10%. Storage Vault closed 7.3% up. Innergex Renewable Energy, Lundin Gold, Bausch Health Companies, BCE Inc., Boralex, Emera Incorporated, Telus Corp and Hydro One climbed 1.3 to 5%.

Our Stance: Technically, the index remains below its 21-period Simple Moving Average (SMA), a sign that the short-term bullish momentum is still under pressure. The immediate focus is on the 24,900 support level, which will be key in determining near-term direction. Holding above this level could set the stage for a rebound, potentially bringing the index back above its SMA.

Commodity Update: The euro strengthened on Monday following Germany’s expected election results, where opposition conservatives emerged victorious. Meanwhile, the U.S. dollar continued its downward trend amid growing concerns over the U.S. economic growth outlook. In commodities, gold held steady at $2,954.30, while silver rose by 0.11% to $33.05. Copper dropped by 0.15%, settling at $9,548.50. Brent crude oil slipped by 0.30% to $74.24, extending last week’s slight decline, as weaker-than-expected U.S. economic data fueled concerns over lower oil demand. Investors are focusing on upcoming GDP data this week for further economic insights.

Technical Update: The S&P/TSX Composite Index’s 1.44% decline to 25,147.03 underscores the continued volatility in Canadian equities. The sharp 4.95% drop in the basic materials sector was a primary drag on the index, reflecting broader concerns about commodity prices and global economic uncertainty. Technically, the index remains below its 21-period Simple Moving Average (SMA), a sign that the short-term bullish momentum is still under pressure. The immediate focus is on the 24,900 support level, which will be key in determining near-term direction. Holding above this level could set the stage for a rebound, potentially bringing the index back above its SMA. However, a decisive break below 24,900 would increase the risk of extended losses, with the next key support zones at 24,700 and 24,500. Market participants should closely monitor sector performance and macroeconomic developments, as sentiment remains fragile.