The Canadian stock market closed on a firm note

Image Source : Krish Capital Pty Ltd

Index Update: The benchmark S&P/TSX Composite Index, which climbed to a high of 25,668.94 intraday, ended the day's session with a gain of 165.61 points or 0.65% at 25,648.84.

Macro Update: Data from Statistics Canada showed the annual inflation rate in Canada edged higher to 1.9% in January 2025, from 1.8% in the previous month. The CPI in Canada rose 0.1% from a month earlier in January 2025, as expected, compared with a 0.4% decline in December 2024.

The annual core inflation rate in Canada which excludes eight of the most volatile components such as food, energy and mortgage interest costs, rose for the second month to 2.1% in January 2025, the highest in nearly a year, up from December's 1.8%. On a monthly basis, core consumer prices increased by 0.4%, after falling by 0.3% in the prior month.

Top Movers: Canada Goose Holdings, Seabridge Gold, Equinox Gold, Parex Resources, Trican Well Service, Eldorado Gold, Bausch Health Companies, Aritzia, Bombardier Inc., and B2Gold Corp climbed 3 to 4.5%.

Our Stance: From a technical standpoint, the index remains in a favorable position, staying above its 21-period Simple Moving Average (SMA), which suggests that the bullish trend is intact. However, the index is testing an important support level of around 25,400. If it holds above this level, the path for continued growth looks promising. Conversely, a drop below this mark could open the door to retracement risks, with key support levels to watch between 25,200 and 25,000.

Commodity Update: The U.S. dollar remained steady on Wednesday, bolstered by concerns over tariffs and ongoing Russia-Ukraine tensions. Meanwhile, the New Zealand dollar fell after the central bank enacted a large interest rate cut. In the commodities market, gold slipped 0.15% to $2944.50, silver dropped 0.56% to $33.18, and copper declined 0.48% to $9418.10. Brent oil rose 0.20% to $76.04, driven by oil supply disruptions in the U.S. and Russia, while markets awaited further clarity on Ukraine peace talks. Investors are closely eyeing the upcoming Federal Reserve minutes for insights into future rate decisions and policy.

Technical Update: On Tuesday, the S&P/TSX Composite Index posted moderate yet promising gains, rising by 165.61 points to close at 25,648.84, reflecting a 0.65% increase. This positive movement was supported by strong trading volumes, indicating continued investor confidence. The energy sector played a key role in driving the rally, up 1.10%, signaling optimism in both sector-specific stocks and the broader market outlook. From a technical standpoint, the index remains in a favorable position, staying above its 21-period Simple Moving Average (SMA), which suggests that the bullish trend is intact. With the Relative Strength Index (RSI) at 56.94, there's still potential for further upside without reaching overbought conditions. However, the index is testing an important support level of around 25,400. If it holds above this level, the path for continued growth looks promising. Conversely, a drop below this mark could open the door to retracement risks, with key support levels to watch between 25,200 and 25,000. The index's ability to maintain its position above these levels will be essential to sustaining the current bullish sentiment and potentially unlocking further gains in the short term.