October 2, 2018
10:00 am EDT
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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428
US stock markets have been unable to keep Mondayâ€™s party going, instead giving back some of their gains. The Dow is flat today after rallying 0.75% on Monday, while the S&P/TSX is down 0.25%. Overseas markets have been trending lower for the most part, especially in Europe where the Dax and other major continental indices are down 0.6% with Italy preparing for a showdown with the EU over its planned larger budget deficit. Interestingly in Asia Pacific, the Hang Seng fell 2.3% but Shanghai gained 1.0% and the Nikkei rose 0.1%.
Commodity markets are mixed today. Metals are rallying with Silver surging 2.2% to approach $15.00/oz, copper climbing 1.4% and gold gaining 1.1% to trade back above $1,200/oz. This could attract interest to mining stocks today. Energy markets are mixed. WTI and Brent Crude are digesting their recent breakouts over $75.00 and $85.00 per barrel respectively. Natural gas is up 0.2% trading near $3.15/mmcf.
The Canadian Dollar has paused this morning to digest Mondayâ€™s big breakout. Although we could see some backing and filling today, yesterday marked a big turning point for CAD with the Loonie catching a big tailwind from the US and Canada reaching a deal on trade and averting a trade war, combined with continued gains in oil prices.
Itâ€™s a quiet day for economic news but we could see investors start to position ahead of tomorrowâ€™s US ADP payrolls and Fridayâ€™s US nonfarm payrolls plus Canada Labour Force Survey reports.
Relative Strength and Sector Rotation Report:
The announcement that Canada has reached a trade deal with the US sparked a big relief rally in Canadian automotive stocks, which had been depressed lately with the sector having been under threat of tariff action had negotiations failed.
We did not, however, see a rebound in the Canadian forest products which had also been weakening on a relative strength basis in recent days.
Oil and Gas producers on both sides of the border strengthened yesterday for the most part, benefiting from a breakout over $75.00 by WTI crude oil.
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