Morning Minutes 09/21/2018

Morning Minutes

Brexit Breakdown, Dow New High, Positive Canada Data, Sector Changes

September 21, 2018
10:00 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

In breaking news this morning, the British Pound (GBP) has gone off a cliff in the last hour and is now down 1.3% against the US Dollar. UK-EU Brexit talks have broken down after the EU rejected the UK’s “Chequers” plan, increasing the possibility of a no deal Brexit. With Sterling under pressure, the FTSE 100, which is mainly made up of multinationals, is up 1.3% today.

North American stock markets are off to a positive start today with the Dow up another 75 points or 0.25% and the S&P also opening at a new high. Yesterday the Dow broke out to a new all-time high, confirming the new highs set by the S&P 500, Dow Transports, Nasdaq 100, and Russell 2000 over the last several weeks. The US economy and stock market have been an island of stability of late, attracting capital away from the sea of turmoil elsewhere. That being said, it appears some investors have started to go bargain hunting as the Hang Seng is up another 0.6% today continuing a move up from near 26,000 toward 28,000 in under two weeks.

The Loonie and the S&P/TSX Composite are holding steady this morning after Canadian retail sales and inflation numbers came through mixed. Headline retail sales growth over month of 0.3% for August was slightly less than the 0.4% the street was expecting. Excluding autos, however, sales growth of 0.9% was well ahead of the 0.6% street estimate. Meanwhile, headline inflation of 2.8% was in-line with expectations; but core inflation of 1.7% was well above the 1.4% street estimate. The numbers suggest that except for the risks surrounding trade negotiations, pressure remains on the Bank of Canada to continue raising interest rates, particularly with the Fed expected to raise US rates next week.

Stock markets could be quite active into the weekend. Not only is today Quadruple Witching Day where a number of major index futures and options expire, it’s also the last day before Monday’s big sector realignment in the S&P 500 and other major indices. Internet and media related companies will be leaving the Consumer Discretionary and Technology areas and merging with the telcos to form a new group called Communications Services starting on Monday. Companies affected include: Disney, Facebook, Alphabet (Google), Netflix, and Twitter.

SIA Wealth in the Media:
Colin Cieszynski is scheduled to appear on BNN Bloomberg about 3:10 pm EDT this afternoon to talk about the markets.

Colin’s Cieszynski’s weekly market wrap on ABC News Radio is scheduled for 4:25 pm EDT this afternoon.

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