TSX closes marginally down on Monday

Image Source : Krish Capital Pty Ltd

Index Update:

The S&P/TSX Composite Index fell by 0.31% to 24,953.52 on Monday, trimming last week’s 1% advance. Canadian equities faced headwinds from falling oil prices and renewed trade-policy tensions. Energy stocks bore the brunt of the decline, after OPEC+ announced a second consecutive month of accelerated output increase.

Macro Update:

President Trump’s unexpected 100% tariff on foreign-produced films reignited concerns over broader retaliatory measures that could weigh on global demand for Canadian resource exports. Mixed signals from Beijing regarding U.S. trade talks further dashed hopes for a near-term resolution.

The S&P Global Canada Composite PMI fell to 41.7 in April 2024 from 42 in the previous month, marking the fifth consecutive contraction in the country's private sector and the steepest decline since June 2020. Both manufacturing and service sector outputs saw similar declines. On the price front, input cost inflation fell to a three-month low but remained elevated. However, as demand conditions weakened, output charges saw a slight decline, marking the first decrease in over four years. 

Top Movers and Losers:

The biggest gainers of the session on the S&P/TSX Composite were Parkland Fuel Corporation (TSX: PKI), which rose 5.51%. Bird Construction Inc. (TSX: BDT) added 4.93% and G Mining Ventures Corp (TSX: GMIN) was up 4.64%. Biggest losers included Bausch Health Companies Inc (TSX: BHC), which fell 8.70%. Secure Energy Services Inc. (TSX: SES) declined 6.74% and Baytex Energy Corp (TSX: BTE) down 6.61%.

Our Stance:

The index continues to trade well above its 21-period Simple Moving Average (SMA), a key technical indicator that often acts as dynamic support in trending markets. This positioning suggests that the short-term uptrend remains intact, and the recent weakness may represent a healthy consolidation rather than a shift in trend.

Commodity Update:

The dollar remained weak Tuesday, pressured by a two-day rally in Taiwan's currency that lifted other Asian peers, exposing the U.S. dollar's fragility. Investors awaited concrete progress in U.S.-China trade talks beyond diplomatic signals. Gold rose 1.27% to $3,364.30, silver jumped 2.34% to $33.22, and copper edged up 0.59% to $9,455.20. Brent crude inincreased.10% to $60.33 after hitting four-year lows on OPEC+ output concerns.

Technical Update:

On Monday, the S&P/TSX Composite Index posted a modest decline, falling 77.99 points (0.31%) to close at 24,953.52. The pullback was primarily driven by a sharp decline in the healthcare sector, which dropped 5.39%, exerting broad-based pressure on the index. Despite the day’s losses, the index continues to trade well above its 21-period Simple Moving Average (SMA), a key technical indicator that often acts as dynamic support in trending markets. This positioning suggests that the short-term uptrend remains intact, and the recent weakness may represent a healthy consolidation rather than a shift in trend. From a technical standpoint, support at 24,600 remains a crucial level to watch. A decisive break below this zone could trigger further downside momentum, potentially leading to a deeper pullback toward the next support level near 24,300.