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 ISE Homebuilders Index (RUF.I) & VanEck Vectors Steel Index ETF (SLX)

World markets continue to churn through the heart of earnings season digesting corporate results and economic news. Moving into August, the focus has turned from large cap stocks toward mid-caps and small-caps, particularly in the week ahead, with US retailers not expected to report until mid-month.

Some of the fear and turmoil which had gripped markets early last week has subsided for the moment. Although the potential for Chinese regulatory action re-emerged, particularly in the video game sector, that quickly subsided. Covid Delta wave also remains an ongoing risk, but has been shifted to the back burner for now. Similarly, cryptocurrencies have rebounded from last week’s rout.

Some US indices have managed to eke out new highs in the last week, but overall, market action suggests that investor sentiment remains somewhat cautious. While not panicking, investors don’t appear overly enthusiastic, continuing to greet strong earnings results with lukewarm reactions. It appears that the summer of sideways with its quick rotations and short moves with limited follow-through in any direction, may persist for some time yet.

In addition to the continuing flood of earnings reports, the coming week is also a busy one for economic news. The latter part of this week brings trade data for the US, Canada and China with the main events being the US nonfarm payrolls and Canadian employment reports on Friday. Next week brings US inflation numbers.

In this issue of Equity Leaders Weekly, we take a look at how capital has started to return to sectors traditionally aligned with overall economic growth, revisiting the homebuilding (Consumer Discretionary) and steel (Materials) sectors.

ISE Homebuilders Index (RUF.I) 

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