Morning Minutes 8/4/2020

Morning Minutes

Stocks Pause as Investors Digest Earnings and Economic News

August 4, 2020

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

Coming off of a strong start to the week which saw the NASDAQ reach a new all-time high, US markets have paused this morning while investors consider this week’s developments so far and catch their breath while waiting for a large amount of scheduled news due later in the week. US index futures are up 0.4% today after rallying 0.7% to 1.4% on Monday. Gold is steady just below $2,000/oz while WTI Crude oil is down 1.6% but holding above $40.00/bbl

On Monday the US ISM manufacturing PMI beat expectations (54.2 vs street 53.6), but more importantly, the New Orders component, a leading indicator, was particularly strong (61.5 vs street 46.8) while the employment component, a lagging indicator, continued to struggle (44.3 vs street 48.3). Today at 9:30 am EDT, Canadian manufacturing PMI is due with the street expecting a reading of 4.1 for July down from 47.8 in June.

As is common, the first week of August is a busy one for scheduled economic news. Wednesday brings US ADP payrolls and service PMI reports from around the world, the Bank of England meets on Thursday, and Friday features US nonfarm payrolls and Canadian employment numbers.

We are still moving through the heart of earnings season this week with the spotlight turning more to small and medium sized companies. Among the large caps, the focus is on insurance this week with Manulife Financial, Sun Life, Prudential, and MetLife reporting results and Communications with Walt Disney and ViacomCBS reporting.  Other companies scheduled to report results this week include Square*, Wayfair* Thomson Reuters,and Franco-Nevada Wednesday, Uber, Constellation Software, and BCE on Thursday, finishing with Magna International and Restaurant Brands* on Friday.

There are also a few political developments that could influence trading, including ongoing fiscal stimulus negotiations in the US and ongoing tensions between the US and China currently focused on the status of social network TikTok.

*Shares of Restaurant Brands are held in some portfolios managed by SIA Wealth Management.

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