Morning Minutes 5/5/2020

Morning Minutes

Stocks Rally, WTI Regains $20.00 on Reopening Anticipation  

May 5, 2020

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

As more economies start to reopen, crude oil finds itself in the opposite situation of where it has been as the forces which drive the price collapse, falling demand and a failure to cut production, start to reverse into a situation of potentially recovering demand and falling production (OPEC + agreement kicking in and companies cutting production/capital spending). On anticipation of a less bleak supply/demand situation, oil prices are up again today with WTI blasting through $20.00/bbl toward $22.90 up 12.4% on the day so far, while Brent Crude is up 7.6% and taking a run at $30.00/bbl. Oil may remain active over the next few days as more producers report results and production/exploration plans, and US weekly inventories come out, API this afternoon and DOE tomorrow morning.

The improving sentiment on anticipation of economies starting to reopen which has boosted commodities (copper is up 0.5% today), has also been helping to boost equity markets overnight. Over in Europe, the Dax and FTSE are both up 1.4%. US index futures are up about 1.3% with Dow Futures rising 322 points and building on yesterday’s 26-point gain.

It’s another big day for earnings reports on both sides of the border. This morning’s headliners include online furniture retailer Wayfair which is up 10.1% in premarket trading after posting a smaller than expected loss per share (-$2.30 vs street -$2.60), on sales of $2.33B which were up about 20% over year and slightly above expectations.

Companies reporting in Canada today include Sun Life, Suncor Energy, Thomson Reuters and Kinross Gold. Later today in the US, reports are due from Walt Disney, Beyond Meat, Prudential, Pinterest, and video game producers Electronic Arts and Activison Blizzard.

March trade numbers for North America are out this morning with the US posting a larger than expected deficit (-$44.4B vs street -$44.0B) and Canada posting a smaller than expected deficit (-1.4B vs street -$2.0B). At 10:00 am the US ISM non-manufacturing PMI survey for April is due with the street expecting a decline to 36.8 from 52.9 in March as lockdowns hit the broader economy. Tomorrow morning US ADP payrolls are due with the street expecting a drop of 20.0M jobs as the monthly numbers catch up to the weekly unemployment filings.

 

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