Canada's Stock Market Hits All-Time High: What's Next?

A profit-taking period could be on the horizon once the next negative headline hits

• The Canadian stock market has reached new all-time highs as optimism swells.
• Prime Minister Mark Carney and the Liberal government are set to outline their agenda in coming weeks.
• Canadian-focused exchange-traded funds (ETFs) are generating bullish technical signals via gold cross formation.

Canada’s stock market reached a fresh all-time high this week, and prices continued to climb on today, rising about 0.75% to 25,886 through midday trading.

The gains come despite a sharp pullback in crude oil prices (/CL), which is a surprise beause Canada’s stock market is heavily weighted toward energy companies.

Meanwhile, Crude prices fell over 2% on to day.

The labor market in Canada is also in a precarious spot, with the unemployment rate at 6.9%, according to the latest jobs report for April. However, investors feel confident the new Prime Minister Mark Carney can navigate the troubles.

The iShares MSCI Canada exchange-traded fund (EWC) is now up nearly 20% since April when prices fell more than 11% through the first week of that month to trade at the lowest levels since August 2024. That nearly matches the gains seen in the U.S. market over the same period.

The trade war with the United States was the primary driver of market selling in April. Prime Minister Carney has assembled a cabinet designed to tackle the trade problem with its southern neighbor. The Canada-U.S. trade minister Dominic LeBlanc serves as Carney’s front man on the issue. LeBlanc is no stranger to negotiating with the US.

Just last year, he was in Mar-a-Lago with former Canadian Prime Minister Justin Trudeau.

Carney has stated he will lead the negotiations with the US while taking the advice of his cabinet. However, Mr. Carney seems inclined to shift Canada’s alliances to rely more on Europe in terms of defense. The prime minister visited the White House earlier this month in a prelude to opening discussion between the two countries.

The Liberal government will outline its agenda in detail later this month. Given the recent market performance, investors seem confident that Canada’s new government will tackle these problems head on and deliver a new framework for trade that bolsters its economy.

Trading the Canadian stock market

The iShares MSCI Canada exchange-traded fund (EWC) serves as a liquid investment vehicle for US investors to gain exposure to Canadian stocks. It tracks the S&P/TSX index.

Price action has carved a V-shaped recovery since April, with prices now pushing into fresh all-time highs. The sudden drop and recovery saw the 50-day simple moving average (SMA) cross below and then above the longer-term 200-day SMA.

The cross below is referred to as a death cross and typically implies more losses are to follow. However, the quick shift to the 50-day SMA crossing above the 200-day SMA, generated a golden cross, a high-profile signal that is seen as bullish. Indeed, prices have risen since that signal generated earlier this month.

With prices at new highs, nothing stands in the way of technical resistance. However, prices have pulled away from their respective exponential moving averages (EMAs), notably the nine- and 21-day EMAs. A profit-taking period could be on the horizon once the next negative headline hits the Canadian market. A pullback to the 9-day EMA could help to settle nerves and reestablish the bullish trend.

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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