Morning Minutes 10/22/2018

China Boosts Stocks Heading Into a Big Earnings Week

October 22, 2018
9:00 am EDT

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

Stock markets are attempting to rebound to start the new week with China leading the way. Boosted by supportive comments about the Chinese economy and the government’s support of the private sector, Shanghai soared 4.3% overnight while the Hang Seng climbed 2.3%. The sharpness of the bounce feels like a bear market relief rally but the positive sentiment has pushed Copper up another 1.3%, carried into European trading where the Dax is up 0.6% and the FTSE is up 0.8%, and has US index futures trying to shrug off Friday’s losses with a 0.4% gain.

Despite the early boost from China, this week is looking like another bottom up stock and sector driven week with a flood of earnings reports from big cap companies coming out on both sides of the border that could have a significant impact on individual stocks and groups.

In the US, for example, 8 of the 30 Dow stocks report results over Tuesday and Wednesday. Several of the multinational big-ticket consumer goods stocks that disappointed badly last quarter due to trade disputes report again mid-week including Ford, Whirlpool and Harley Davidson. A lot of big technology related companies report later in the week including Amazon.com, Intel, Microsoft and Google, plus Twitter in social media.

In Canada this week, the big focus is on resource stocks with several majors in the mining, energy and forest products sector scheduled to report quarterly results, headlined by Barrick Gold and Suncor Energy on Wednesday. A number of Canadian technology related companies also report this week including Shopify and Constellation Software.

There are also some significant economic announcements of note this week. The Bank of Canada is widely expected to announce another 0.25% interest rate increase at its meeting on Wednesday. In the US, GDP is due on Friday but traders may also keep a close eye on US housing numbers due through the week to see if the recent plunge in homebuilding stocks is justified or overdone.        

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