Morning Minutes 4/30/2020

Morning Minutes

Oil Rallies, Stocks Level Off Amid Mixed News

April 30, 2020

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

US index futures are holding steady this morning, consolidating yesterday’s gains. Dow futures are up 16 points following a 532-point gain yesterday. European markets are down with the Dax falling 0.7% and the FTSE falling 1.4%.

Its a big day for economic news, which has been mixed.  US jobless claims increased by 3.8M which was worse than street 3.5M but still down from 4.4M last week. Continuing claims of 17.9M were up from 15.8M last week but better than the 19.2M street estimate claims, and better than the 26.2 million initial claims reported over the last five weeks.

EU Q1 GDP fell 3.3% from a year ago, slightly worse than the 3.1% drop the street had expected, with Spain contracting 4.1% and France contracting 5.8%. The European Central Bank maintained its lending rate at today’s meeting but indicated it stands ready to bring in additional monetary stimulus if needed.

China announced released mixed PMI results with government non-manufacturing PMI increasing (53.2 vs previous 52.3) but government manufacturing PMI (50.8 vs street 51.0) falling short of expectations and Caixin manufacturing PMI slipping back under 50 (49.4 vs 50.1). US Chicago PMI is due at 9:45 am EDT with the street expecting a drop to 38.0 from 47.8 last month. National manufacturing PMI reports for several countries including the US and Canada are due tomorrow morning.

Crude oil is up again today with WTI rallying 15.4% toward $17.40/bbl and Brent crude rallying 12.0% to $25.00/bbl. Investors appear to be responding favorably to ConocoPhillips decision to voluntarily cut production in May by 265K bbl/d or about 20% from its Q1 average production. Investors may look for more signs of falling North American supply as Big Oil earnings roll out over the next few days.

We’re now into the peak of earnings season with a number of big names, particularly in the technology sector, reporting overnight. Highlights include:

Facebook is up 7.6% in premarket trading despite mixed results as EPS missed expectations ($1.71 vs street $1.75) but revenues beat expectations ($17.74B vs street $17.41B). Management indicated that revenues dropped off in March but have stabilized. The company cut its capital budget for 2020 to $14-$16B from $17-$19B.

Microsoft* beat the street on earnings ($1.40 vs street $1.26) and sales ($35.0B vs street $33.6B). Management indicated that the impact of COVID-19 could hit in future quarters. Management guided for next quarter sales in the $35.8B-$36.8B range above street $36.4B. This guidance suggests a growth rate of about 8% for the June quarter, down from about 15% in the March quarter.

Results are due later today from Apple*, Amazon.com, Twitter, Visa, Gilead Sciences, Whirlpool and others in the US. In Canada today results are due from gold producers Agnico-Eagle, Eldorado and Yamana, plus Open Text and Imax.

*Shares of Apple and Microsoft are held in some portfolios managed by SIA Wealth Management.

 

New Video: Market Commentary and Portfolio Update – April 29, 2020

With Jeremy Fehr – Founder and CEO, Paul Vendrinsky – Portfolio Manager and Ted Bader – President of SIA Wealth Management

A new webinar video of Jeremy Fehr, founder of SIA Charts and SIA Wealth, discussing current trends in world markets, and Ted Bader, President of SIA Wealth discussing advisor strategy is now available. A PDF version of the presentation is available.

GoToMeeting Version: https://attendee.gotowebinar.com/recording/5063142600833304578

YouTube Version: https://youtu.be/fgZMoxEyu9I

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