BMO bank analyst Sohrab Movahedi sees a good chance Canadian banks will outperform the benchmark in the second half of the year,
“In the first half of calendar 2024, the Canadian bank index has delivered a positive total return of ~0.5%, underperforming the S&P/TSX composite by ~5.5%. In our view, this slow start to the year is driven by continued investor caution around the macroeconomic environment and its implications for earnings recovery prospects for the Canadian banks given still elevated credit costs and sluggish loan growth.
“Given the heightened volatility in both Cu prices and the mining equities over the past month, we have revisited our implied Cu price analysis. We estimate that the large/mid-caps are currently implying an average Cu price of $5.38/lb, representing a relatively large 26% premium to spot . We believe this strong premium is being driven by increased investor appetite for Cu exposure and some M&A speculation.