Morning Minutes 8/5/2020

Morning Minutes

New High For Gold, ADP Payrolls and Earnings Moves in Focus

August 5, 2020

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

Building on gains this morning in Europe, where the Dax is up 0.6% and the FTSE is up 1.0% US index futures have been pointing toward a positive open. Dow futures had been up about 200 points earlier this morning but have slipped back a bit as investors digest today’s ADP payrolls report. Dow futures are currently up about 180 points or 0.7% while NASDAQ futures are up 0.2%.

Precious metals continue to attract attention with gold rallying 1.5% to a new all-time high above $2,050/oz and silver climbing 3.5%.

Headline US ADP payrolls for July came in weaker than expected (167K vs street 1.5M) but after considering that the bar was raised by a 2.0M upward revision to June payrolls (to 4.3M from 2.3M), the overall employment picture remains promising. Earlier today, Service PMI reports out of Europe generally came in a bit softer than expected but remained in expansion territory above 50 in the 51.0-57.0 range. Yesterday, Canadian Manufacturing PMI surprised the street jumping back above 50 (52.9 vs street 44.1 and previous 47.8). US non-manufacturing PMI is due at 10:00 am EDT with investors expecting a slight dip from last month (street 55.0 vs previous 57.1)

Dow futures have also been getting a boost from Walt Disney, which is up 6.2% in premarket trading after the company reported a surprise profit of $0.08 per share which was better than the $0.64 per share loss the street had expected. Sales came in short of expectations ($11.8B vs street $12.4B) as the closure of theme parks and the loss of live sports impacted revenues which were partly offset by explosive growth in streaming subscriber growth. Disney Plus hit 60.5M subscribers, reaching the bottom end of the 60-90M subscriber goal it had set for 2024.

Payments processing provider Square is up 11.2% in premarket trading today after reporting a surprise profit ($0.18 vs street -$0.05). Overall revenues increased by 64% over a year ago, boosted by a 167% sales increase for its cash payments app. Management also noted that online transactions jumped 50% over year, helping to offset a 9% drop in transactions from small businesses during the lockdown.

Beyond Meat is down 6.8% in premarket trading after the company reported a $0.16 loss per share for Q2 which was worse than the $0.02 per share loss the street had expected. Growth in sales through grocery stores was not enough to offset a plunge in restaurant sales during the quarter.

Companies scheduled to report results later today include: Thompson Reuters, Manulife Financial, MetLife and Wayfair.

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