Copper prices reached new heights in the third quarter of 2023, averaging $6.41 per pound and marking a 6% increase from the previous quarter. This surge, which included a record close of $6.74 per pound on September 8, was driven by tightness in the physical market, reduced Chilean production, and strong demand despite geopolitical uncertainties and a strong dollar. RBC Capital Markets analyst Sam Crittenden highlighted that while copper mining equities have underperformed the commodity, they remain attractively valued. He identified Hudbay, Capstone, and First Quantum as top picks, noting their strong free cash flow, operational improvements, and potential upside from a restart in Panama.
Scotiabank strategist Hugo Ste-Marie shared insights from his quarterly survey of North American portfolio managers, revealing a mixed outlook. While investors expressed concerns about Federal Reserve policies, they maintained a resilient risk appetite, favoring Canadian and emerging market equities, as well as sectors like technology, energy, and materials. Nearly 60% of respondents anticipated rising U.S. 10-year yields, but overall, investors were hedging against tighter policy rather than abandoning equities.
Deutsche Bank strategist Binky Chadha previewed the upcoming U.S. earnings season, emphasizing that strong earnings growth, driven by AI demand, cyclical growth, and commodity prices, would likely sustain record levels in Q3. Contrasting with the consensus expectation of a deceleration, Chadha predicted another quarter of above-average earnings beats, despite potential volatility from an FOMC meeting and U.S. mid-term elections.