The Canadian market ended sharply lower on Tuesday

Image Source : Krish Capital Pty Ltd

Index Update: The benchmark S&P/TSX Composite Index, which tumbled to 24,344.84 around late morning, losing more than 650 points in the process, ended the session with a loss of 429.57 points or 1.72% at 24,572.00.

Macro Update: Canadian retail spending increased by 3.2% to $839.8 billion in 2023, of which $67.7 billion was e-commerce revenue. Online sales increased by 7.0%, underscoring a sustained shift toward digital platforms. More than half of the retail operating revenue in 2023 was generated in four subsectors: motor vehicle and parts dealers (27.2% of retail operating revenue), food and beverage retailers (18.6%), general merchandise retailers (12.4%), and gasoline stations and fuel vendors (10.1%).

Top Losers: Sangoma Technologies and Coveo Solutions tumbled 7.9% and 7.4%, respectively. Docebo ended at 6.35% down, and Lightspeed Commerce closed lower by 5.2%. Shopify Inc., Kinaxis Inc., Celestica and Sylogist lost 2.3 to 4.7%.

Our Stance: The index remains below its 21-period Simple Moving Average (SMA), reinforcing the broader downtrend and signaling continued selling pressure. While this could lead to a short-term bounce, downside risks persist. The key support level to monitor is 24,200, aligning with a significant horizontal trendline. Holding above this level may provide a foundation for stabilization and potential recovery. However, the break below could accelerate losses, opening the door for a deeper correction toward 24,000 and 23,800.

Commodity Update: The U.S. dollar dropped to a three-month low against major currencies. At the same time, Asian shares showed mixed results after new U.S. tariffs prompted countermeasures from China and Canada, raising fears of an escalating trade war. In commodities, gold fell 0.13% to $2,917.80, silver rose 0.28% to $32.47, and copper increased by 0.20% to $9,384.80. Brent crude oil declined 0.20% to $70.93 amid concerns over global trade tensions and rising oil production. Oil prices hit a five-month low on Tuesday, with OPEC+ confirming plans to boost output from April amid ongoing economic uncertainties modestly.

Technical Update: On Tuesday, the S&P/TSX Composite Index dropped 429.57 points, or 1.72%, to close at 24,572.00. The decline was primarily driven by weakness in the financial sector, which fell 1.76%, contributing to the overall bearish sentiment. The index remains below its 21-period Simple Moving Average (SMA), reinforcing the broader downtrend and signaling continued selling pressure. Momentum indicators suggest caution, with the Relative Strength Index (RSI) at 35.29, nearing oversold territory. While this could lead to a short-term bounce, downside risks persist. The key support level to monitor is 24,200, aligning with a significant horizontal trendline. Holding above this level may provide a foundation for stabilization and potential recovery. However, a break below could accelerate losses, opening the door for a deeper correction toward 24,000 and 23,800. Market sentiment remains fragile, with investors closely watching macroeconomic trends and sector performance.