Positive since 2019, the correlation between the S&P 500 and copper has now turned negative.
Analysts at RBC Capital Markets, which spotted this shift, say the news reflects the dichotomy between a resilient U.S. economy and a weaker China, the latter of which has gobbled up the yellow metal to fuel its infrastructure building. Related: Why Dr. Copper has lost its degree in forecasting the economy
Another key factor, they say, is the global shift from manufactured goods toward services. The RBC analysts say copper has traded around a resistance level of $3.50 to $3.75, which is slightly higher than the prior period of moderating China growth from 2011 to 2019, but below the $4.75 peak during the pandemic. The lead copper contract
has been flat this year, compared to the 17% rise for the S&P 500