Morning Minutes 6/15/2020

Morning Minutes

Stocks and Commodities Backslide Over Recovery Uncertainty

June 15, 2020

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

The new trading week has commenced with stock markets around the world continuing to give back some of their recent gains. Reports of new coronavirus flareups in the US, China, India and elsewhere have raised worries of potential setbacks to the reopening of the world economy.

Overnight, China, one of the first countries to reopen, released disappointing retail sales (-2.8% over year vs street -2.0%) and industrial production (4.4% over year vs street 5.0%) reports for May, adding to concerns that a reopening rebound may be shallower, slower, and rockier than investors had been hoping

US Index futures are down 1.25% to 2.35% so far today with Dow futures down nearly 600 points, or all of Friday’s 477-point bounce and more. In Europe, the Dax and FTSE are both down about 1.1%. Crude oil is also under pressure again today with WTI down 3.25% and Brent falling 2.0%. The US Dollar is broadly gaining, while gold has dropped 1.3% toward $1,715/oz.

There are a few economic developments of note this week. Retail sales numbers are due for the US on Tuesday, followed by Canada on Friday. Tonight, the Bank of Japan meets with investors looking to see if more monetary stimulus could be forthcoming. Tomorrow Fed Chair Powell testifies to Congress and could give more color on the Fed’s economic and monetary policy outlook, particularly on how long the central bank thinks it could take for the economy to recover.

It’s a quiet week for earnings reports overall. In Canada, results are due from some of the smaller retailers and restaurant chains. Cineplex reports on Thursday and may comment on its plans for the future as a still-independent company since Cineworld cancelled the planned takeover.  In the US, homebuilder Lennar reports results Tuesday.

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