Morning Minutes 4/13/2020

Morning Minutes

Mixed Markets React to OPEC+ Deal and Await Earnings Reports

April 13, 2020

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

World markets have had a mixed return to trading from the long weekend. US index futures are trading down about 0.25% with Dow futures falling 70 points, a moderate retracement of Thursday’s 285-point gain. Over in Europe, the Dax is up 2.2% while the FTSE is up 2.9%. Asia Pacific trading saw the Nikkei fall 2.3% and the Hang Seng rise 1.3%. The resource-sensitive Australian market rallied 3.5%. Gold is down 0.4% this morning, trading near $1,745/oz.

The biggest event over the weekend was the news that OPEC, Russia and others reached a new supply deal to cut production by 9.7 million barrels per day, or about 10% of world production, starting May 1st. This was a bit less than the 10-15 mmbbl/d range investors had been hoping for, but a significant step all the same.  The US did not formally join the deal but apparently was involved in the background, particularly with helping Mexico to sign on.  Oil contracts have had a mixed reaction to the news with WTI rising 0.6% and Brent falling 0.4% as investors ponder over whether this cut will be enough in the face of low demand.

This week, the spotlight turns from broad market moves to companies and sectors. Earnings season kicks off Tuesday with reports from JPMorgan, Wells Fargo and Johnson & Johnson, followed on Wednesday by Citigroup, Bank of America, Goldman Sachs, and others.

It’s also another big week for economic news. China reports monthly trade numbers tonight followed by Q1 GDP, retail sales and industrial production on Thursday night. US retail sales for March are due Wednesday, followed by housing starts on Thursday.

The Bank of Canada meets on Wednesday which investors may look to for comments on the state of the Canadian economy. Investors may also watch for signs of whether the Bank is planning additional support measures on top of recent rate cuts and asset purchases after the Government passed additional fiscal support on the weekend.

 

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