Morning Minutes 10/30/2018

Earnings, Economics and Elections Drive Market Action

October 30, 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 keep trying to regain their footing but with so much technical damage done this month, it’s going to take some time to restore investor confidence. Yesterday, for example, US markets started out in the green but finished in the red. So far this morning, Dow futures are up 131 points or 0.5% in a bid to shrug off yesterday’s 245 point or 1.0% loss. Overseas markets have been showing signs of life. Australia’s S&P/ASX 200, which is the closest market to Canada in terms of composition with its large weighting in mining, energy and financial stocks, rallied for a second straight day, gaining 1.3%. Shanghai and Tokyo also posted gains of over 1.0% overnight and this morning. European indices are trading flat to up 0.5%.

It’s another busy morning for earnings reports. Under Armour has rallied nearly 10% this morning in premarket action after the athletic clothier reported adjusted EPS of $0.25, more than double the $0.12 street estimate. Sales of $1.44B were slightly above market expectations. The company raised its full year EPS guidance to $0.19-$0.22 from $0.16-$0.19.

General Electric, on the other hand, has been under pressure after reporting EPS of $0.14, well short of the $0.20 street estimate, and slashed its dividend to a penny in order to retain cash. Reports also suggest the SEC’s investigation into the company’s accounting practices is being widened.

A number of big events and announcements are on the way over the next week that have the potential to move markets and could mark a turning point for trading.This afternoon brings Facebook earnings and a product event for Apple, who reports its results Thursday afternoon. Economic news picks up with US ADP payrolls and Canada monthly GDP tomorrow, Manufacturing PMI reports Thursday, then employment and trade numbers for both the US and Canada on Friday. Meanwhile, the US midterm election campaign continues to heat up heading into Monday’s vote. US President Trump has been out threatening to impose tariffs on the rest of Chinese imports into the US, but then what?

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