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 Sector Scopes Monthly Update May 2024 & Silver Continuous Contract (SI.F)

It’s an odd feeling that for a week that saw the Dow Industrials reach 40,000 for the first time, and the S&P 500 plus the NASDAQ hitting new all-time highs, while at the same time cryptocurrencies have been soaring, there doesn’t seem to be much in the way of celebration. Perhaps because markets have been climbing pretty much non-stop for the last six months, some investors may be starting to get tired, this could explain why right after the big milestone was achieved, US indices levelled off and then started to retreat. Over the last month, every major country ETF we track is up but in the last week, nearly every major country outside of North America is down. The US and Canada were flat over the last week despite all of the breakouts and records.

So far this pause appears to be a rest stop within an ongoing uptrend, but sector action suggests the potential for a deeper correction. Although 10 of the 11 main sectors are up over the last month, 9 of the 11 have gone down in the last week, with only Technology and Utilities still clinging to small gains over the last few days. A conga line of neutral to hawkish Fed speakers over the last week has started to push treasury yields upward once again, so it comes as no surprise that interest rate sensitive Real Estate has been the worst performing group of the last week, along with Consumer Discretionary following a series of disappointing earnings reports from retailers.

In addition to disappointing earnings and/or guidance from retailers, it also has been a tough week for the housing sector as a number of key monthly housing market indicators have dropped and disappointed significantly. The coming week brings us to the end of the month with a focus on early PMI reports, including today’s flash numbers, inflation reports from the US, Europe, and Canada, and North American GDP updates. Canadian bank earnings season kicks off today with TD Bank the first out of the blocks, while the remainder of the big banks scheduled to report next week. Commentary on lending conditions in Canada and the US may be of interest. It was another good quarter for stock markets so expectations for Investment Banking, Trading and Wealth Management operations may be higher. In the US, earnings reports are mainly focused in the retailing and consumer technology areas.

In this edition of Equity Leaders Weekly, we take our monthly look at relative strength across sectors and at the significance of the recent Silver rally.

Sector Scopes Monthly Update May 2024

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