Lexicon Financial Group Weekly Update — June 3, 2026
“The idea that commodities, as an asset class, is finished is just fundamentally flawed.”
From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel
ISSUE 231
Looking Around
Canada is a resource-rich nation. For decades, a long-standing critique of the Canadian economy was that it was only “sticks and rocks”, highlighting that our economy relies heavily on natural resources and lumber instead of manufacturing or technology.
Of course, as Canada’s economy has diversified significantly, these industries (while still important) represent less of our economic output today than they did in earlier decades.
But could we be entering a period where commodities (think aluminium, copper and rare earth elements (REEs)) are poised to drive economic growth? Canada certainly has a huge supply of these important materials.
For example, REEs are actually plentiful in the earth’s crust but because of their geochemical properties, they are quite often widely dispersed, making them economically difficult to mine. They are rare because they are “scarce” in finished forms. Maybe “rare” should refer to the fact that without strong demand, they were “rarely” mined profitably by big companies. That’s changing.
News stories about REEs have increased since 2025. Reasons for this include escalating geopolitical tensions, defense stockpiling, and a fevered rush to reduce reliance on Chinese supply chains for REEs.
Today, we think of REEs as a range of 17 elements, and their unique physical, chemical, magnetic, and luminescent properties enhance efficiency, durability, and performance, while enabling the miniaturization of electronic components and alloys. This makes REEs critical to a wide range of industrial and high-tech applications, including electronics, clean energy, aerospace, automotive, and defense as well as clean technology and alternative energy systems, such as wind turbines, fuel cells, rechargeable batteries, and electric vehicles. However, the largest and most important use of REEs is in the production of permanent magnets, which accounted for 45.2 per cent of global demand in 2023. These magnets are stronger and lighter than conventional magnets; they are crucial for shrinking the size of electric motors and electronic devices without sacrificing performance. (1)
Smaller means faster and often reduces costs across the entire supply chain of advanced goods.
Despite being plentiful, the REEs’ supply chain is notably concentrated, with China dominating the processing stages, accounting for approximately 90 per cent of global processing. This near monopoly on REEs allows China to obtain price control, supply chain control, and geopolitical leverage. It influences global manufacturing, trade negotiations, and tariffs, which impacts industries that rely on REEs. Countries across the globe are trying desperately to increase supply chain diversification. (2)
This move has led to investment pouring into non-China supply chains, with mining being a key beneficiary of this trend, including gold, copper, uranium, lithium, and tungsten. All of this has many analysts contending that we are in the early stages of a lengthy, structural commodity "supercycle" rather than a temporary spike. The last supercycle (2000–2011) was largely driven by China’s rapid industrialization and urbanization. This time, the supercycle could be broader, more widespread, and potentially longer term. However, creating new critical minerals supply chains is extremely commodity-intensive and time-consuming. It is also very capital-intensive to build supply to meet future demand.
This time around, emerging and frontier populations – particularly in sub-Saharan Africa and Central Asia – are experiencing rapid urbanization and a growing middle class population is pointing to strong demand for this “stuff”, in terms of energy demand, water systems, construction materials for infrastructure, food and agriculture.
Decarbonization efforts via electrification are significantly resource-intensive, which is a key tailwind for the mining industry, as well as related resources companies. Copper is crucial for power generation, grids, electric vehicles and charging infrastructure, as well as batteries and storage systems.
Meeting the growing demand for AI requires extremely energy-intensive data centres, accelerating demand for investment in power infrastructure and, increasingly, nuclear energy. That has meaningful implications for uranium demand and nuclear fuel markets. The industry has a strong track record of adopting new technologies, and AI will undoubtedly play a role in enhancing operational efficiency. (3)
Basically, given all of this, investors should stay disciplined and stick to their investment strategy. However, for our clients who have more aggressive portfolios, we added an allocation to base metals several months ago. It should be noted though that being exposed to Canadian markets means we’re also benefitting at the same time, considering people around the world look to us as a stable source of sticks and rocks.
Read and Watch
Want deeper insight into topics in your Weekly Update? Then, read and/or right click:
What Canadians need to know about a 'technical recession'
Inflation is spreading through the U.S. economy beyond the pump
Inflation hits 3.2% in the euro zone as Iran war pushes energy costs higher
Five Ways Middle East Tensions Could Affect Japan’s Economy
Commentary: What China’s underperforming tech stocks say about its real economy
Looking Back
Canada’s main stock index, the S&P/TSX Composite Index (TSX), gained ground last week, while stock markets in the U.S. continued to push into record territory as the U.S. and Iran were reportedly working toward a deal to extend a ceasefire. While lower oil prices weighed on the TSX energy sector last Friday — the biggest weight on the overall index — technology stocks led the TSX higher. For the month, the TSX was up 2.4 per cent, marking its second straight month of gains.
Investors also sifted through Canadian gross domestic product (GDP) figures in the first quarter. Statistics Canada said economic growth stalled in the first quarter, leading to a second consecutive decline in real GDP. Although this is the technical definition of a recession, economists have cautioned against reading too much into this. Real gross domestic product by expenditure was essentially unchanged on a quarter-over-quarter basis, StatCan said. Converting that to an annualized rate — the figure most economists pay close attention to — magnifies the quarterly changes and results in a decline of 0.1 per cent in real GDP for the first quarter. (4)
Major U.S. stock indexes all rose during the holiday-shortened week in the U.S. Several closed at record highs as investor sentiment was supported by rising hopes for a U.S.-Iran peace agreement, falling oil prices, and continued momentum in artificial intelligence (AI)-linked stocks. Markets were closed Monday in observance of the Memorial Day holiday.
On the inflation front, the Bureau of Economic Analysis (BEA) reported that its personal consumption expenditures (PCE) price index rose 0.4 per cent month over month in April. This is lower than the 0.7 per cent increase in March. On an annual basis, however, the PCE index rose 3.8 per cent, up from 3.5 per cent in March — the highest reading since May 2023. Core PCE — which excludes food and energy costs — rose 0.2 per cent for the month, down from a 0.3 per cent increase in March but up to 3.3 per cent, which is its hottest reading since November 2023. Personal spending rose 0.5 per cent, while personal income was roughly flat. The BEA also revised first-quarter gross domestic product (GDP) growth down to a 1.6 per cent annualized pace from the initial estimate of 2.0 per cent, primarily driven by downward revisions to investment and consumer spending.
Last week, the pan-European STOXX Europe 600 Index closed up 0.14 per cent in local currency terms. European investors continued to look for signs of progress on a U.S.-Iran agreement that could lead to the resumption of oil and gas shipments through an open Strait of Hormuz. Other major European stock markets all ended up last week. The only exception is the United Kingdom’s FTSE 100 Index, which fell 0.54 per cent.
The European Central Bank (ECB) also warned that the energy price shock had been both large and very persistent. It noted that the war in the Middle East was weighing on energy markets, confidence, and near-term growth prospects. Some board officials have publicly signaled that a June interest rate hike is likely. The European Union (EU) also reduced its economic growth forecasts for the eurozone due to the major energy shock from the Iran war and an already volatile geopolitical and trade environment. It expects gross domestic product (GDP) to grow 0.9 per cent in 2026, down from the 1.4 per cent growth registered in 2025 and lower than its previous estimate of 1.2 per cent. The EU updated its 2026 inflation forecast to 3 per cent, up from the 1.9 per cent it had previously expected.
Japan's stock markets surged to historic highs last week, driven predominantly by developments between the U.S. and Iran, which tentatively agreed to a 60-day memorandum of understanding to extend the ceasefire and commence formal nuclear negotiations. Japan’s economy is heavily reliant on energy imports, so the prospect of a durable reduction in Middle East tensions provided significant support. Technology and AI-related shares led the advance, with semiconductor and electronic component manufacturers surging on renewed enthusiasm for the AI build-out and the easing of supply chain concerns linked to the conflict.
On the economic front, Tokyo's core consumer price index rose 1.3 per cent year over year in May, down from 1.5 per cent in April and lower than the consensus forecast of 1.5 per cent. This marks the sixth consecutive month of deceleration and the fourth straight month below the Bank of Japan's (BoJ) two per cent target, as government energy subsidies and private school fee relief continued to weigh on prices. This softer inflation reading had added a degree of uncertainty to the June rate-hike debate.
China’s stock markets ended mixed last week, as investors weighed China’s latest industrial profit data and the fallout from the China Securities Regulatory Commission’s (CSRC) crackdown on offshore online brokerages serving mainland investors.
China escalated its crackdown on illegal cross-border securities activities, with the CSRC imposing fines and rectification measures on several online brokerages operating in mainland China without the required licenses. This triggered sharp declines in offshore-listed Chinese brokerage shares and weighed on Hong Kong market sentiment during the week. (5)
The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.
Rare earth elements facts, Natural Resources Canada
Market Concentration of Rare Earth Elements: China’s Dominance and the Global Response, Madeleine Rzad, Michigan Journal of Economics, January 9, 2026
Global natural resources: Structural tailwinds driving the next commodities supercycle, Daniel Sullivan and Darko Kuzmanovic, Janus Henderson Investors, March 26, 2026
Tech stocks send TSX higher, U.S. markets also up amid hopes of U.S.-Iran deal, The Canadian Press, May 29, 2026
Global markets weekly update - U.S.-Iran deal hopes drive sentiment across markets, T. Rowe Price, May 29, 2026
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Looking to Learn?
If you want to know more about some of the topics we wrote about this week, just click on the links below:
Video: Rare earth elements and why are they important
Heavy Rare Earth Elements: Rising Supply Chain Risks and Emerging Policy Responses
The Rupture Cycle – Commodities, geopolitics, and Canada’s moment: Heather Exner-Pirot
China squeezes Japan over rare earths in repeat of 2010 showdown
