Morning Minutes 6/5/2020

Morning Minutes

Stocks Rally as North American Jobs Rebound and Oil Keeps Climbing

Month Day, Year

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Crude oil prices are soaring this morning with WTI up 2.8% trading near $38.50/bbl and Brent Crude rallying 3.7% to trade near $41.50. It appears that negotiations to extend supply cuts and curb cheating among OPEC+ countries (with Iraq and Iran attracting particular mention in press reports) have made enough progress to potentially move a planned video conference up to Saturday from sometime next week. The weekly Baker Hughes US drill rig count report due at 1:00 pm today may also influence sentiment toward energy and energy (particularly producers and service) stocks.

Anticipation of an economic recovery continues to manifest in several areas as investors anticipate easing of lockdown measures in many countries and fiscal/monetary stimulus measures, such as those announced by Germany and the ECB yesterday, kick in. Copper is up 1.8% today and equity markets have been on the rise. In Asia Pacific trading, the Hang Seng rallied 1.8%, while in Europe, the Dax is up 1.5% and the FTSE is up 0.9%.

US index futures were already on the rise this morning with gains accelerating following the release of a better than expected US Nonfarm payrolls report. Payrolls increased by 2.5 million in May, a significant turnaround from the 20.6 million jobs lost in April, and much better than the 8.0 million in additional job losses the street had expected. The unemployment rate fell to 13.3%, which was better than the 19.8% investors had been expecting. Dow Futures are up about 500 points or 1.9% this morning, with S&P and NASDAQ futures up 1.2% and 0.2% respectively.

Canada also posted a big turnaround for employment in May with Statistics Canada reporting an increase of 289K jobs compared with a loss of 1.9M jobs in May. The street had been expecting additional losses of 500K. Canada’s unemployment rate rose to 13.7% but was better than the 15.7% investors had been expecting. This news and the rallies in oil/copper prices could set the stage for positive sentiment across Canadian markets today.

Capital continues to move out of defensive havens as investor confidence improves. Gold is down 2.0% and has dropped back under $1,700/oz. the Japanese Yen is declining and the US Dollar is down another 0.4% relative to the Canadian Dollar. US bond prices are also falling again with the 10-year treasury yield rising above 0.90%.


New Video: Market Commentary and Portfolio Update – June 3, 2020

With Jeremy Fehr – Founder and CEO of SIA Wealth Management

A new webinar replay is available featuring Jeremy Fehr, founder of SIACharts and SIA Wealth, discussing current trends in world markets. A PDF version of the presentation is available.

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