The TSX Composite Index has soared this year, even as gold prices have recoiled. It has jumped by 14.35% this year and 30% in the last 12 months, outperforming the S&P 500. This week will be important for the Canadian fund as top companies like Barrick Gold, Franco-Nevada, and Constellation Software release their earnings.
Top TSX Composite Index stocks to release earnings
The TSX Composite Index has jumped to a record high this year amid a rally of companies from different industries.
BlackBerry stock has jumped by 138% this year, making it the index’s best performer. This rally happened as the company pivoted to the artificial intelligence (AI) industry, where it provides numerous services like software and communications.
Bird Construction has soared by 134% as it has become a major developer of data centers in Canada and other markets.
Companies in the gold and silver industries have also helped the index even as the price has sunk into a bear market. Aya Gold & Silver stock rose by 88%, while Russel Metals, Montage Gold, Altius Minerals, and Abra Silver Resource have soared by double digits.
The next important catalyst for the index is the earnings by top companies like Barrick Gold, Franco-Nevada, and Constellation Software that come out on Tuesday this week.
Other top names to watch include Hydro One, Pan American Silver, and Exchange Income. However, the most important earnings reports will come later this month, when major banks including Scotiabank, Bank of Montreal (BMO), Royal Bank of Canada (RBC), and TD Bank report their results.
These companies are among the largest constituents of the index, meaning their earnings and guidance can have a significant impact on the broader market.
Focus on Bank of Canada (BoC) after stellar earnings
The TSX Composite Index also reacted to last week’s jobs numbers, which showed that hiring surged in July. Canada added over 75k jobs in July, even as the United States lost 23,000 jobs. The unemployment rate dipped to 6.4%, the lowest level in two years. Canada added 18,200 jobs in June.
Still, despite the strong labor market and high inflation, analysts predict that the BoC will maintain interest rates steady. The bank will want to observe whether the growth is healthy before making its next move.
Looking ahead, the TSX Composite Index will react to the upcoming US consumer inflation report. Economists expect the data to show that inflation softened modestly in July as energy prices fell. These numbers will help the Fed when it is making its next interest rate decision.
The index will also react to the energy market, where oil prices are rising amid tensions in the Middle East. Iran has made substantial demands before resuming its talks with the United States.
TSX Index technical analysis
TSX Composite Index chart | Source: TradingView
The daily chart shows that the TSX Composite Index has been in a strong rally this year and is now sitting at its all-time high. It has retested the upper side of the ascending channel.
The index is supported by the 100-day Exponential Moving Average (EMA), while the Average Directional Index (ADX) has risen to 16, the highest level since April 29. A rise in the ADX is a sign that the upward momentum is continuing.
Therefore, the most likely scenario is where it continues rising as bulls target the key resistance level of 37,000 points. This view will be confirmed if it moves above the upper side of the ascending channel.
The alternative scenario is where it retreats and retests the lower side of the ascending channel at 35,500.
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