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 Copper Continuous Contract (HG.F) & iShares MSCI Hong Kong Index Fund (EWH)

The November equity market rebound has continued in the last week, but at a more moderate pace. The S&P 500, for example has gained 7.4% in the last month, but only 0.95% of that has come in the last week. The S&P/TSX Composite, which has gained 5.2% in the last month only gained 0.4% in the last week.

Indices which led the rebound, such as the S&P 100 and the NASDAQ 100 appear to be encountering resistance near their summer highs. Meanwhile, the recovery appears to be broadening out, moving down the US food chain with mid caps and small caps breaking out to the upside. In addition, some of the countries which had been lagging recently such as the UK, Japan and China have all broken out in the last week.

Sector action has been similar with a number of the recent leaders stalling out near their summer highs, particularly Financials and Semiconductors. Sectors which have cleared their summer highs include Technology-Software, Aerospace, Homebuilders, Forest Products Consumer Staples, and Uranium. Energy, on the other hand, continues to pull back along with energy prices.

Economic news has slowed in the last week and may remain quiet through the upcoming US Thanksgiving holiday weekend. The main focus of business news has been US retailer earnings where clothing store chains have generally done well, but everyone else has disappointed on earnings, guidance, or both, leading to quite varied market reactions to results. For the next few days, the main focus is on Black Friday sales and mall traffic as an indicator of how much consumers are willing to spend in the key holiday season, the health of their finances, the impact of inflation and confidence in the overall economy. Canadian retail sales data also comes out on Friday.

The only other notable economic announcement this week is Flash PMI reports from around the world today and for the US on Friday. Next week focus starts to turn back toward the next Fed meeting with the Beige Book regional economic report and Core PCE inflation, the Fed’s preferred measure on the way. Treasury yields have been drifting downward this week despite ongoing hawkish commentary from Fed officials on inflation, which could be setting up for a showdown on the potential for rate cuts in 2024 when the next round of FOMC member forecasts comes out in mid December.

Canadian bank earnings week is coming up with results due from Scotiabank on Tuesday, TD, Royal Bank and CIBC on Thursday, and Bank of Montreal plus National Bank on Friday. It’s fiscal year end so investors may be looking for news on dividends in addition to the results and commentary related to the economy, loan losses, and capital markets. The US earnings calendar for the coming week is relatively quiet and dominated by smaller cap retailers and tech companies.

Throughout this year, China’s struggling economy has been simmering away on the back burner, quietly dragging on commodities and undermining expectations for resource demand. In the last month, a number of positive economic reports have come out suggesting that its economy and demand for resources may finally be improving including GDP, imports, new loans, retail sales and industrial production. In this edition of Equity Leaders Weekly, we look at how the prospects for a recovering China appear to be having a positive impact on China-sensitive markets like Hong Kong stocks and copper.

Copper Continuous Contract (HG.F)

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