Morning Minutes 7/23/2020

Morning Minutes

Stocks Climb as Investors Digest Earnings Reports

July 23, 2020

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

Shrugging off rising political tensions between the US and China indices in North America and Europe are on the rise again this morning as investors respond to a large number of earnings reports. US index futures are in the green today, varying between gains of 0.25% for Dow Futures and 0.65% for NASDAQ futures. Over in Europe, the Dax is up 0.35% and the FTSE is up 0.50%. commodities are mixed with copper up 0.1% and WTI crude oil down 0.6%. Precious metals are mixed today, gold is up another 0.5% trading near $1,875/oz, while silver is down 1.4% in what looks like a normal trading correction following yesterday’s big Silver rally.

There have been a couple of economic developments of note. US weekly jobless claims were 1.41M last week, more than the 1.30M investors had expected, but continuing claims fell again and beat the street (16.1M vs street 17.0M and previous 17. 3M). Canada received a vote of confidence from S&P Global Ratings today who maintained their AAA credit rating for Canada indicating it expects the Canadian economy to recover and fiscal stimulus to taper off moving into 2021, but it did warn that its rating could change if government finances deteriorate further or stimulus needs drag on longer than currently expected. The next significant economic news is flash PMI reports for the US, Germany, France and the UK tomorrow morning which may provide the first glimpse into whether recovery momentum has accelerated, stabilized or subsided into July.

Its another busy day for earnings reports in both the US and Canada. Highlights include:

In Canada, Suncor Energy reported a $0.40 per share loss as production fell by 18.5%, but the $614M loss was not as bad as the $1.28B loss the street had been expecting. Loblaw reported adjusted EPS of $0.74, down from $1.01 a year ago, but slightly better than the $0.71 street estimate as higher revenues for the grocer (particularly from stockpiling and online sales) were offset by higher spending on employee compensation and safety measures due to the COVID-19 crisis. Other companies scheduled to report results in Canada today include: Cenovus Energy, Husky Energy and Teck Resources*.

In the US, Twitter is up 5.4% premarket after reporting higher than expected users (186M vs street 172M), but lower than expected revenues ($683M vs street $707M) as advertising sales came in down 23% from a year ago. Several companies beat expectations including: Whirlpool ($2.15 vs street $1.00), Microsoft* ($1.46 vs street $1.34), Tesla ($2.18 vs street $0.03), PulteGroup ($1.15 vs street $0.87), and AT&T ($0.83 vs street $0.79). Las Vegas Sands and Southwest Airlines reported deeper than expected losses.

US companies expected to report results later today or tomorrow morning include: Amazon.com*, Intel, Starbucks, American Express and Verizon.

*Shares of Microsoft, Amazon.com, and Teck Resources are held in some portfolios managed by SIA Wealth Management.

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