TSX Finishes Marginally Lower as Tech Drags

Index Update:  The S&P/TSX Composite Index edged 0.1% lower to close at 31,866.26 on Tuesday, as weakness in technology stocks outweighed strength in commodity producers. Energy stocks helped limit the downside, supported by higher oil prices. Despite the modest pullback, the TSX remains on track to finish the year up nearly 29%, marking its strongest annual performance since 2009, driven largely by heavyweight banks and gold miners.

Macro Update :  US 10-Year Yield Holds Near Multi-Week Low: The US 10-year Treasury yield hovered around 4.13%, staying close to its lowest level in over three weeks. Investors continued to weigh a divided Federal Reserve, which signaled openness to further cuts if inflation keeps easing. Fed Minutes Highlight Policy Divide: Minutes from the December meeting showed clear differences within the FOMC. Some officials remain focused on stubborn inflation risks, while others are increasingly concerned about a softening labor market. Rate Cuts Still Expected in 2026: Markets continue to price in two quarter-point rate cuts next year. While timing remains uncertain, the Fed’s own projections suggest policymakers see room to ease if inflation trends cooperate.

Top Movers and losers:  Top movers include Aya Gold & Silver Inc (TSX: AYA) up by 5.52%, Ero Copper Corp (TSX: ERO) up by 4.19%, and Silvercorp Metals Inc (TSX: SVM) up by 3.44%. Top Losers include Energy Fuels Inc (TSX: EFR) down by 5.72%, Bitfarms Ltd (TSX: BITF) down by 3.25%, and Aecon Group Inc (TSX: ARE) down by 2.80%.

Our Stance:  The index continues to trade comfortably above its 21-period Simple Moving Average (SMA), which acts as a key short-term trend support and reinforces the prevailing bullish bias. Momentum indicators remain supportive, with the RSI holding at 62.50, signalling sustained strength and keeping the trend within neutral-to-positive territory.

Commodity Update:  Major currencies traded in narrow ranges on Wednesday amid thin year-end volumes, as investors awaited Federal Reserve meeting minutes for policy cues into 2026. Regional FX activity stayed muted. Gold fell 0.49% to USD 4,364.65, silver dropped 5.26% to USD 73.82, and copper eased 0.68% to USD 12,549.00. Brent crude slipped 0.20% to USD 61.23, with oil down over 10% in 2025 amid supply-demand imbalances.

Technical Update:  The S&P/TSX Composite Index declined 30.33 points (−0.10%) on Tuesday to close at 31,866.26, as short-term profit-taking tempered the recent upside momentum. Despite this modest pullback, the broader technical outlook remains constructive. The index continues to trade comfortably above its 21-period Simple Moving Average (SMA), which acts as a key short-term trend support and reinforces the prevailing bullish bias. Momentum indicators remain supportive, with the RSI holding at 62.50, signalling sustained strength and keeping the trend within neutral-to-positive territory. On the downside, the 31,800 level represents immediate support. A decisive break below this zone could invite further corrective pressure toward 31,600, with the next major support located near the 31,500 mark.