Morning Minutes 7/31/2020

Morning Minutes

Gold Eyes $2,000/oz as Equities Digest Earnings and Economic News

July 31, 2020

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

The biggest story in world markets overnight has been the continuing gains for gold which is up another 1.3% has advanced to within $10.00/oz of the $2,000/oz big round number. Silver also has been attracting interest with a 3.5% gain. WTI crude oil is up 0.8% while copper is down 0.4%.

Equity market action has been constructive this morning. NASDAQ futures are up 1.1% after a number of large components posted positive earnings reports late yesterday, while Dow futures are up 0.3%. Over in Europe, Milan is up 1.1% while Frankfurt is up 0.8% as investors responded to stronger than expected June retail sales reports (ex. Germany +5.9% over year vs street +3.0%), and Q2 GDP reports that were not as bad as feared (ex. France -13.8% vs street -15.2%). The FTSE is down 0.2%, held back by relative gains in the British Pound today.

China reported better than expected Manufacturing PMI (51.1 vs street 50.7) and non-Manufacturing PMI (54.2 vs street 51.2) survey results for July. US Chicago PMI, widely seen as a preview of Monday’s national number, is due at 9:45 am EDT with the street expecting a 43.9 reading up from 36.6 last month.

Canada’s economy staged a stronger than expected rebound in May as monthly GDP increased by 4.5% which was better than the 3.5% bounce the street had expected after an 11.7% one-month plunge in April.

After the close last night, four of the largest technology companies announced earnings. Apple* is up 7.4% premarket after beating expectations on earnings ($2.58 vs street $2.04) and announcing a four-for-one stock split. Facebook is up 6.2% premarket after beating the street on both sales ($18.6B up 11% over year vs street $17.4B) and EPS ($1.80 vs street $1.39). Amazon.com* is up 6.0% premarket after reporting stronger than expected revenues ($88.9B vs street $81.5B) and EPS. Google parent Alphabet is down slightly this morning despite better than expected earnings ($10.13 vs street $8.21) because sales of $29.8B were down 8.1% from a year ago.

Other companies exceeding earnings expectations overnight and this morning include: Merck ($1.37 vs street $1.04), Caterpillar ($1.03 vs street $0.64) and Ford (-$0.35 vs street $1.17). Companies falling short of expectations include Gilead Sciences ($1.11 vs $1.35), Exxon Mobil (-$0.70 vs street -$0.61) and Chevron (-$1.59 vs street -$0.92).

Air Canada posted a $1.79B Q2 loss on an 89% decline in revenues in Q2, which was worse than the $1.0B loss the street had expected. Interestingly, cargo revenues were up 52% in the quarter, but this was not enough to offset a 96% plunge in passenger traffic from a year ago.

*Shares of Apple and Amazon.com are held in some portfolios managed by SIA Wealth Management.

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