The Toronto Stock Exchange rose for a third-straight session on Friday but fell short of closing at a fresh record high amid broad sector based buying as investors continue to see strong market fundamentals, even as Rosenberg Research sees "potential trigger for weakness" in the index.
The S&P/TSX Composite Index closed up 61.87 points, or 0.2%, at 34,471.36, adding to the near 670 points gained over the prior two sessions. But while it touched an early afternoon session high above 34,572, it didn't manage to hold there and eventually slipped below an existing record close of 34,541.27 posted on March 2.
Among sectors, Info Tech was up 1.6%, Telecom up near 1.3% and Base Metals up near 1%, despite a lower gold price. In contrast, Health Care was down near 0.5% and Energy eased 0.15%, despite modest gains for the oil price.
For this week's Technical Analysis, Walter Murphy at Rosenberg Research shifted his focus to global equity markets, including Canada's. Murphy noted the Dow Jones Canada Stock Index was up 6.14% year to date at the end of last week. This put it in 13th place among the 31 non-U.S. Dow Jones Indexes. Over the same period, the TSX index gained 6.69%.
Murphy noted recent comments pointed out the TSX index has been probing Fibonacci resistance in the 33,851 area, the level where the rally from last April's low is 1.618 times the earlier 2023-2025 uptrend. "That is still the case, so it is taking on the role of key resistance," he added.
Murphy also noted last month's comment noted the weekly Coppock Curve's post-February downtrend had begun a bottoming process from above its neutral zero line that could continue into mid-May. In the five weeks since then, the "bottoming process" has morphed into a flatline consolidation structure, Murphy said. "That, plus the fact that it did not confirm February's high, increases the potential that the indicator is becoming more susceptible to a breakdown than a breakout. That would be a potential trigger for weakness in the TSX index," he added.
In the meantime, Murphy said, March's 31,146 low remains key support. A breakdown will complete a top formation, allowing for a deep test of 30,808-29,379, he added. Murphy noted 33,581 is important Fibonacci resistance, and beyond that, his team would look to 35,842 for next resistance.
On the economic front, data released earlier Friday showed the retail sales tend has turned upward, at least for now. National Bank noted an increase of 0.9% in March, three ticks above the consensus estimate and the prior provided advance estimate last month. Also, Statistics Canada's advance estimate for April suggested nominal retail sales rose 0.6% in the month. "But once again, given the continued surge in gasoline prices that occurred in the month, this figure heavily reflects higher prices at the pump," National Bank said. "As a result, in real terms, retail sales should register a second monthly contraction going into the second quarter. Consumers also face a mortgage interest-payment shock and a fragile labour market, which could weigh on discretionary spending going forward," it added.
Still, in reflecting optimism around the outlook for the Canadian economy, RBC published a note today entitled 'Canada's GDP growth likely turned positive in Q1 after Q4 contraction', a full week ahead of when the related data is slated for release. Canada's economy likely returned to growth in Q1 with gross domestic product bouncing back by an annualized 1.7% after declining 0.6% in Q4, supported by improving domestic growth drivers, RBC said.
Of commodities, gold prices had eased by midafternoon Friday, remaining rangebound as the dollar steadied. Gold for June delivery was down US$19.30 to US$4,523.20 per ounce.
But West Texas Intermediate crude oil closed with a small gain on fading hopes for a quick peace deal between the United States and Iran. WTI crude oil for July delivery closed up US$0.25 to settle at US$96.60 per barrel, while July Brent oil was up US$0.75 to US$103.33.