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 Natural Gas Continuous Contract (NG.F) & SPDR S&P Bank ETF (KBE)

Despite being interrupted by an extended long weekend in the US and Canada, the last week has been a constructive one for global equity markets. Major North American and Emerging Market indices finished June and Q2 off strong and have held on to their gains so far this week. There has been some softness in Europe this week which may be related to disappointing Manufacturing and Service PMI reports from several countries there. Manufacturing reports from the US and Canada were also soft but partially offset by strong US Construction Spending. The rest of this week brings a flurry of economic reports including US Non-manufacturing PMI, US ADP Payrolls today, and US Nonfarm Payrolls, Canada Employment, and wage inflation reports for both countries tomorrow.

Economic data is attracting particular attention this week as investors start to focus in on the environment for corporate earnings. Earnings season starts next Thursday and with equity markets having continued to climb since the end of the last earnings season, higher expectations have been getting built into stock prices. Confession season has been quiet so far which can be seen as supportive, but its unclear at this time whether investors may focus more on past results or forward guidance.

Friday’s Canadian numbers may also attract attention heading into next week’s Bank of Canada meeting where the central bank is widely expected to raise its benchmark rate by another 0.25%. The Reserve Bank of New Zealand, who has been a lead domino in the current monetary tightening cycle, also meets next week.

Market gains of the last week have been broad-based with interest sensitive groups (Financials, Utilities, and Real Estate), leading the advance. Energy stocks have also been doing well with oil and gas prices on the rise.

In this edition of Equity Leaders Weekly, we look at the recent rally in Natural Gas and at the US Banking sector.

Natural Gas Continuous Contract (NG.F)

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