Morning Minutes 11/26/2018

Black Friday, Oil Tests $50 and Bank Earnings in Focus

November 26, 2018
8:45 am EDT

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

With Americans returning to work from a weekend of Turkey, Football and Shopping, world stock markets are off to a positive start. The Hang Seng rallied 1.7% overnight while the Dax is up 1.2% in Europe this morning. Dow Futures are up 1.0% or about 250 points, clawing back all of Friday’s 178-point loss and then some. Overnight developments moving markets include speculation related to US-China trade talks ahead of Friday’s G-20 summit.

In North America, early Black Friday sales reports suggest strong results with Mastercard indicating sales of $23B, up 9% from last year, ShopperTrak indicating foot traffic at the malls was down only marginally, about 1.7%, and Adobe estimated online sales Friday of $6.2B, up 23% from a year ago. The shopping spree continues with Cyber Monday on today. Retailers had continued to weaken on a relative strength basis Friday, we’ll see today if the results are enough to spark a rebound on the traditional or online side.

Crude Oil appears to be stabilizing this morning with WTI holding $50.00/bbl and Brent holding $60.00/bbl so far as bulls try to regroup following Friday’s plunge. As with previous morning rallies that fizzled out, it remains to be seen if this is another dead cat bounce or the start of base formation. OPEC meets later next week so oil could remain volatile on speculation over production cuts for the next several days.

In Canada this week, the focus is on big bank earnings starting with Bank of Nova Scotia on Tuesday. It’s the fiscal year end for the banks so we could see some dividend announcements as well. This time around, investors will likely be looking for comments related to the impact of rising interest rates in the US and Canada on results and prospects. Any comments related to the impact of ultra-low domestic oil prices (not just in Alberta) and trade tensions hurting the auto sector (GM reportedly set to announce closure of Oshawa operations today) may also impact sentiment.

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