Global equity markets continue to show strengthening breadth, with leadership broadening into Europe, Asia, and Canada. Cyclical sectors, financials, industrials, materials, and energy are driving performance, while defensive areas remain under pressure.
Key Points:
Market Backdrop Remains Constructive
- The S&P 500 and NASDAQ continue to trade at new highs, above all major moving averages.
- Market breadth is improving with more stocks in uptrends and fewer hitting new lows, suggesting strength under the surface.
Global Equities Building Momentum
- MSCI World ex-US has been making new highs for the first time since 2008, with notable leadership from Europe, Japan, India, and Asia.
- Barometer has raised global equity exposure from 5% to ~15%, viewing it as still early-stage.
Financials Lead Across Regions
- US banks like JP Morgan and Morgan Stanley are at new all-time highs; Canadian banks also strong, with BMO leading since earnings.
- European banks such as Santander are breaking out after a decade-long bear market.
- Strategas data shows Fed cuts during bank strength historically did not lead to drawdowns.
Commodities and Resources Showing Strong Relative Performance
- Gold miners have outperformed the metal itself, with 8–9 consecutive weekly gains.
- Copper and base metals turning higher; uranium producers at multi-year highs.
- Canadian energy (XEG) broke out of consolidation; leaders like Imperial Oil and Tamarack Valley continue to push higher.
Technology Requires Selectivity
- Large-cap tech remains strong, but correlations have fallen—clear winners and losers are emerging.
- Smaller semiconductors (e.g., SiTime, Lam Research) are delivering strong results outside of the AI hype cycle.
- Apple’s move to bring its modem in-house benefits SiTime, reinforcing the need to look beyond mega-cap names.
Sector Positioning Favors Cyclicals Over Defensives
- Industrials, financials, materials, and communications show the highest percentage of stocks in uptrends.
- Defensives—staples, utilities, REITs, pipelines—remain weak and are being reduced in portfolios (e.g., Barometer exited Loblaws).
- Current portfolio tilts: ~23% financials, ~16% industrials, ~13% materials, ~12% technology, ~10% energy.