The TSX Composite Index will be in the limelight on Tuesday as the market reacts to the latest Canadian election and its implications in the financial market. The index, which tracks the top Canadian companies, has been in a steady uptrend in the past few weeks, rising from the year-to-date low of $22,222 to the current $24,800, its highest level since April 3.
Mark Carney becomes Canadian Prime Minister
The TSX Composite Index crashed hard earlier this month after Donald Trump announced his tariffs on imported goods. Most goods entering the US from Canada are now being charged a 25% tariff, meaning that the USMCA deal he negotiated was over.
It is against this backdrop that Canadians went to an election this week. Official numbers show that Mark Carney and his Liberal Party won the election, beating Pierre Poilievre of the Conservative Party.
Donald Trump helped the Liberals win the election due to his large tariffs and his rhetoric on making Canada the 51st US state.
The TSX Composite and the Canadian dollar will not react significantly to this election because Carney is a continuation candidate. And most of his policies will not have major implications for corporate Canada.
Carney has made several pledges, with his most important one being the promotion of internal trade across all provinces. He hopes that doing that will boost the economy by about $200 billion or between 4% and 8% of the GDP.
Carney has also pledged to invest in housing and infrastructure. He will also focus on fiscal responsibility by balancing the budget by 2028. Most notably, he hopes to secure some tax cuts and boosting investments in AI and technology.
Most importantly, Carney campaigned on being tough against Donald Trump, a president who has worsened the relationship between the two countries.
Gold mining stocks are helping Canadian stocks
The TSX Composite Index has done well, in part because of gold mining companies that have benefited from its price surge. Gold price has jumped to a record high of $3,500, and analysts anticipate that the trend will continue as global risks remain.
Orla Mining stock has jumped by over 88% this year, a notable thing since it is one of the top miners in the country.
Other top gold mining companies include Lundin Gold, G Mining Ventures, Torex Gold Resources, Kinross Gold, Alamos Gold, Agnico Eagle Mines, Franco Nevada, Wheaton Precious Metals, and IamGold have all jumped by over 30% this year.
The top laggards in the TSX Composite index are Tilray Brands, Algoma SteelTSX Index: Are Canadian stocks a buy after Mark Carney win?, Paramount Resources, Air Canada, and Lightspeed Commerce.
TSX Composite Index technical analysis
TSX Index chart | Source: TradingView
The daily chart shows that the TSX Composite Index bottomed at $22,222 earlier this month, following the launch of Trump’s tariffs. It has moved above the important resistance level at $24,262, its lowest swing on December 20 and March 13.
The index has soared above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls are in control. Other oscillators like the Relative Strength Index (RSI) and the Stochastic Oscillator have pointed upwards.
Therefore, there are odds that the TSX Index will keep rising as bulls target the year-to-date high of $25,833, which is up by 4.25% from the current level. A drop below the support at $24,000 will invalidate the bullish outlook.
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