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Why Canadian equities will struggle to stay in the black

Globe editors have posted this research report with permission of  Russell Investments. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following text is excerpted from the report:

Canadian equities are expected to struggle to remain in the black for the rest of the year, as economic weakness is expected to create a formidable headwind for corporate earnings. Russell Investments has revised its year-end forecast for the S&P/TSX composite index down to 12,400 from 12,600 previously.

Even after the strong rally in global equity markets, Russell's strategists favor equities over bonds and cash, although equities are expected to outperform bonds by a smaller margin than in the first half of 2013. Within global equities, Russell strategists prefer Europe and Japan due to slight improvements in the Eurozone, the success of 'Abe-nomics' in Japan, and the overall attractiveness of Japanese and European equity valuations relative to U.S. valuations.

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