Morning Minutes 7/15/2020

Morning Minutes

Earnings, Vaccines and Bank of Canada In Focus

July 15, 2020

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

Positive momentum from overseas markets and a pair of positive developments stateside have propelled US index futures up 0.6% for the NASDAQ to 1.8%, or nearly 500 points for the Dow. Overseas, the DAX is up 1.8% and the FTSE is up 2.0% in Europe. Asia Pacific Markets were mixed overnight with Sydney rallying 1.9%, Tokyo gaining 1.6% but Hong Kong flat and Shanghai falling 1.5%.

In US news, Moderna is up 17.2% in pre-market trading after the company announced positive results from an early stage trial for its COVID-19 vaccine. Goldman Sachs is up 4.6% premarket after announcing significantly stronger than expected EPS ($6.26 vs street $3.78) and sales ($13.3B vs street $10.0B) boosted by higher trading and investment banking revenues. Later today, results are due from IBM and eBay along with more US Banks. Tomorrow morning brings results from Bank of America, Johnson & Johnson, Honeywell and Morgan Stanley*.

Today’s economic news is headlined by two central bank meetings. The Bank of Japan held its interest rate and QE levels steady but cut its 2020 GDP forecast for the Land of the Rising Sun to -4.5% to -5.7% from its previous forecast decline of -3.0% to -5.0%. The Bank of Canada’s latest decision is due at 10:00 am EDT. No change to interest rates is expected by the street but investors may look for comments related to the health of the Canadian economy, the state of the current asset purchase program, last week’s fiscal update from the federal government or its level of commitment to providing support to the Canadian economy and financial system. Canadian manufacturing sales for May came out this morning showing a 10.7% increase over the previous month which was better than the 9.5% bounce the street had expected.

In the US today, the Empire State Manufacturing Survey for July ramped upward and beat expectations (17.2 vs street 10.0 and previous-0.2). US industrial production is due at 9:15 am EDT with the street expecting a month over month increase of 4.3%.

Crude oil is up this morning with WTI gaining 1.6% and Brent climbing 1.2%. The oil market appears to be getting som support from last night’s API weekly US oil inventory report which showed a 8.3 mmbbl drawdown last week. DOE weekly inventories are due at 10:30 am EDT with the street expecting a 2.0 mmbbl drawdown.

*Shares of Morgan Stanley are held in some portfolios managed by SIA Wealth Management.

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