Morning Minutes June 23, 2020

Morning Minutes

Stocks Rebound From Overnight Hiccup as Flash PMIs Confirm Reopening Recovery

June 23, 2020

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

Stock markets around the world had a brief scare overnight but then quickly recovered after reports that suggested the US-China trade deal was in trouble were quickly denied by the White House who confirmed the Phase I deal remains intact. In under an hour, Dow futures did a 1,000 point round trip between 26,150 to 25,650 and back again. This morning finds Dow futures trading near 26,210, up about 255 points from yesterday’s close, or about 1.0%.

While overnight action reminds investors that in these uncertain times it would not take much to spook the market, this morning finds investors cheering positive economic news. Flash PMI reports out of Europe, the first quick look at June economic conditions, indicate an accelerating rebound as economies reopen. Flash manufacturing PMI reports for the UK (50.1 vs street 45.0 and previous 40.7), plus flash manufacturing PMI (52.1 vs street 46.0 and previous 40.6) and flash service (50.3 vs street 44.2 and previous 31.1) crossed back above 50 into expansion territory and came in well above street expectations.

On this news, the DAX is up 2.7%, the CAC is up 1.9% and the FTSE is up 1.5%. Commodities are climbing again this morning as well with WTI and Brent Crude up 1.8%-2.0%, while copper is up 0.7%. Gold continues to attract interest, gaining another 0.5% to trade near $1,775/oz.

US flash PMI reports are due at 9:45 am EDT with the street expecting readings of 48.0 (vs previous 39.8) for manufacturing and 46.5 (vs previous 37.5) for service. US new home sales follow at 10:00 am EDT.

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