Morning Minutes 5/27/2020

Morning Minutes

US Indices Keep Climbing, Canada Bank Earnings Continue

May 27, 2020

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

Building on yesterday’s gains, US markets are up again this morning as investors continue to anticipate business reopening as lockdowns wind down. US index futures gains today vary between 0.5% for NASDAQ and 1.3% for Dow Futures which are up 336 points, adding to yesterday’s 529-point gain. European markets are also climbing with the Dax up 1.9%, the FTSE up 1.4%.

With investor confidence improving, defensive havens have been knocked back on their heels, including US bonds with the 10-year treasury yield climbing back up above 0.7%, gold, which is down 1.2%, and the US Dollar which is down slightly against the Loonie, Pound and Euro this morning.

Commodities are off slightly as they digest recent gains with WTI crude oil down 1.6% and copper down 0.4%. Later today, weekly API inventories are due with investors looking for potential follow-through on last week’s 4.8 mmbbl drawdown.

Canadian bank earnings continue today with disappointing results. Royal Bank reported adjusted EPS of $1.03 down 54% from a year ago, and short of the $1.65 street estimate. RBC’s loan loss provisions spiked to $2.83B from $0.41B in the previous quarter. Bank of Montreal reported adjusted EPS of $1.04, below the $1.27 street estimate as loan loss provisions jumped to $1.12B from $0.35B in the previous quarter. Both banks maintained their current dividends. Bank earnings week wrap up tomorrow with results due from CIBC and TD.

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