The Changing Correlation Between S&P 500 and Copper

The correlation between the S&P 500 and copper, which had been positive since 2019, has now taken a negative turn.

Shift from Positive to Negative Correlation

According to analysts at RBC Capital Markets, this shift reflects the contrast between a resilient U.S. economy and a weaker China. China has been consuming significant amounts of copper to support its infrastructure development.

Impact of Global Shift and Manufacturing Trends

The analysts also highlight another crucial factor, which is the global shift from manufactured goods to services. This shift further influences the relationship between the S&P 500 and copper.

Resistance Levels and Recent Performance

RBC analysts note that copper has been trading within a resistance range of $3.50 to $3.75. While this is slightly higher than the period of moderating China growth from 2011 to 2019, it is lower than the peak of $4.75 observed during the pandemic.

Performance Comparison

In terms of performance, the lead copper contract (HG00, -0.52%) has remained relatively flat throughout this year. In contrast, the S&P 500 (SPX) has experienced a 17% rise.