Morning Minutes 4/6/2020

Morning Minutes

Shortened Trading Week Starts With Stocks Rallying and Oil Sinking

April 6, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Stock markets around the world are up strongly to start the new trading week, boosted by reports of slowing COVID-19 case count and mortality growth in Europe, particularly Italy and Spain.  Frankfurt is up 4.5%, and Milan is up 2.9%, while London (where PM Johnson has been admitted to hospital) is up 1.9%. Asia Pacific markets also rallied overnight with Tokyo gaining 4.2%, Sydney soaring 4.3%, Seoul surging 3.8% and Hong Kong climbing 2.2%.

Crude Oil is down this morning with WTI falling 3.7% and Brent falling 3.1% after the OPEC + video conference on potential steep production cuts was postponed. Reportedly the two sides are close to a deal and the meeting could still be held later this week. On the interim, oil remains volatile as this morning’s levels are back up from overnight declines near 9%.

Positive sentiment appears to be carrying through to North America as well. US index futures are all up about 3.5% this morning. Dow futures are up about 725 points, clawing back all of Friday’s 360-point loss and adding more gains. Meanwhile signs of fear continue to ease. US bond prices are holding steady and the VIX volatility index continues to trend back downward. The US Dollar is also backsliding today, falling 1.6% against gold, 0.4% against the Loonie and 0.2% against the Pound. The defensive Japanese Yen also continues to weaken.

It’s a short trading week with markets around the world closed on Friday. In addition to a potential OPEC + meeting on oil, other potentially significant events include a Eurogroup finance ministers meeting where common coronavirus bonds could potentially be discussed. Earnings season doesn’t start in earnest until next week, but we may continue to see profit warnings this week. Two reports that could provide more insight into the impact of COVID-19 on travel include Carnival (Cruise Lines) on Tuesday plus Delta Air Lines on Wednesday.

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