Morning Minutes 3/2/2020

Morning Minutes

March Arrives to Mixed Markets and Manufacturing PMI Reports

March 2, 2020
8:45 am EST

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

The new trading week has kicked off with stocks and commodities trying to regain their footing following last week’s market plunge and build on rebound staged in North America late Friday that cut losses on the day. Asia Pacific markets rallied with Shanghai gaining 3.1%, Hong Kong gaining 0.6% and Seoul gaining 0.8%. European markets are mixed with Milan dragged down 2.8% by the coronavirus outbreak in Italy, while London is up 0.2% and Frankfurt is down 0.9%.

US index futures have been swinging between gains and losses overnight. Dow futures are essentially flat at the moment, down 9 points coming off Friday’s 357-point decline. NASDAQ futures are up 12 points building on Friday’s 1-point gain. In commodity markets, WTI and Brent Crude oil are up 1.4%-1.8% with investors speculating OPEC+ could be forced to cut production to meet falling demand while copper is up 1.1%. Gold has regained $1,600/oz today with a 2.25% gain and bonds are climbing today as well on speculation that the negative impact of coronavirus on the global economy could force central banks to bring in more stimulus.

The beginning of the month is usually busy for economic reports. Today the focus is on manufacturing PMI reports. To no surprise, official Chinese manufacturing PMI (35.7 vs street 46.0 and previous 50.0) and non-manufacturing PMI (29.6 vs street 53.8) were terrible, although the private Caixin China manufacturing PMI (40.3 vs street 45.7) was less dismal. In European manufacturing PMI reports, Spain beat the street and climbed back above 50, the UK missed slightly but held above 50 and Germany beat expectations but remained slightly below 50.

The ISM US Manufacturing PMI report is due at 10:00 am EST, with the street expecting a dip to 50.4 from 50.9. US Construction spending is also due at 10:00 am with the street expecting a 0.7% rebound from a 0.2% decline last month. Canadian manufacturing PMI is due at 9:30 am.

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