Morning Minutes 5/26/2020

Morning Minutes

Canada Bank Earnings and Vaccine Progress In Focus

May 26, 2020

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

US investors have returned from their long weekend in a positive mood. US index futures are up 1.5%-2.0% including a 485-point gain for Dow Futures, building on overseas market gains which include the FTSE gaining 1.1% the Nikkei popping 2.5% and the Hang Seng rallying 1.9%.

A number of factors have helped to boost investor optimism including Japan lifting all the remaining states of emergency in its prefectures, Novavax launching a COVID-19 vaccine trial in Australia, the New England Journal of Medicine reporting more positive data on Gilead Sciences Remdesivir COVID-19 treatment, and Merck agreeing to purchase Themis, a private company with a COVID-19 vaccine candidate approaching trials.

In Canada the focus is on bank earnings week which has kicked off this morning. Bank of Nova Scotia announced a 39% drop in EPS from last year to $1.04, but this was not as bad as the $0.96 the street had been expecting. Loan loss provisions nearly doubled to $1.85B. Results from National Bank are due this afternoon, followed by Royal Bank and Bank of Montreal tomorrow.

Anticipation of a rebound in demand as economies reopen and travel resumes, combined with expectations of supply cuts kicking in continues to shore up support for energy prices. WTI crude oil is up 2.7% this morning trading near $34.00/bbl, while Brent crude is up 1.9% trading near $36.00/bbl. Copper is up nearly 1.5% today. Capital continues to leave defensive havens with the US Dollar falling 1.00%-1.25% relative to the Canadian Dollar and the British Pound, and gold falling 0.5%.

 

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