Global markets continued to show resilience this week, supported by broad participation across regions and sectors. Commodities saw short-term corrections following strong rallies, while global equities, particularly in Japan and Europe, continued to trend higher.
Barometer made selective portfolio adjustments, reducing exposure in gold and energy positions while maintaining overweight allocations in financials, industrials, and dividend growth equities. The Barometer Global Fund remains a strong performer, gaining approximately 56 percent since inception compared with 31 percent for the S&P 500 and 45 percent for the MSCI All World Index.
As we enter the seasonally strong period for equities, we remain focused on identifying leadership, managing risk proactively, and positioning portfolios to capture long-term opportunities across global markets.
Key Points
1. Commodities Correct Within a Broader Uptrend
After a strong multi-month rally, commodities experienced a short-term pullback this week. Gold, silver, copper, and platinum all traded lower, prompting us to reduce gold equity exposure by half to protect recent gains. Despite near-term volatility, we continue to view these moves as part of a healthy, early-stage bull market in global commodities.
2. Global Equities Maintain Momentum
International markets continue to strengthen, led by Europe and Japan. The Japanese market has advanced 28% since breaking out to new highs, supported by rising wages and corporate reform. We view this as the early phase of a longer structural uptrend in developed global equities.
3. U.S. Market Breadth Softens
Market breadth in the United States has weakened modestly, with fewer stocks participating in the uptrend. As a result, we’ve reduced U.S. equity exposure to approximately 30% of our equity portfolios. Breadth remains stronger across Canadian and international markets, where participation continues to broaden.
4. Financials and Industrials Lead Global Strength
Investment banks and industrials have been key areas of leadership, while regional banks remain under pressure due to credit concerns. Industrials reached new highs both in the U.S. and globally, reflecting expanding economic participation. Technology remains an underweight position, though we continue to hold select high-quality names through earnings season.
5. Energy and Precious Metals Positions Adjusted
Energy exposure has been reduced from 12% to 8% as the sector continues to move sideways. Within precious metals, positions in GDX, Kinross, and Wheaton Precious Metals were trimmed following strong performance. These changes reflect tactical risk management within a still-constructive long-term outlook.
6. Global Fund Delivers Strong Relative Performance
Since its launch on December 29, 2023, the Barometer Global Fund has gained approximately 56%, outperforming both the equal-weight S&P 500 (31%) and the MSCI All World Index (45%) in Canadian dollar terms. Our continued focus on dividend growth and rising income streams remains an effective offset to persistent inflation and higher long-term interest rates.