Morning Minutes 8/31/2020

August 31, 2020

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

The last day of August kicks off the traditional last week of summer before Labour Day and the return to work/school in many parts of North America. So far, the week is off to a mixed start. US index futures are up slightly, consolidating last week’s gains, while in Europe, the Dax is up 0.5% and the FTSE is closed for a UK holiday.

Asia Pacific markets, however, were mixed with the Nikkei gaining 1.1% after Warren Buffett purchased stakes in five Japanese companies, while the Hang Seng fell 0.9% and Shanghai slipped 0.25%. Declines in Chinese markets came despite better than expected Manufacturing PMI (51.0 vs street 48.7) and non-manufacturing PMI (55.2 vs street 52.1) reports, suggesting investors may be have been taking profits against the news.

A busy week for economic news picks up Tuesday with Manufacturing PMI reports for the US, Canada, Germany and other countries around the world followed by Service PMI reports on Thursday. In the back half of the week, focus turns to employment numbers with US ADP payrolls due Wednesday, weekly US new and continuing jobless claims on Thursday and wrapping up with US nonfarm payrolls plus Canadian employment on Friday.

Overall, it’s looking to be a light week for corporate news with the only earnings reports of note being Zoom Video later today and Macy’s on Wednesday. There are a couple of listing changes to note; Apple and Tesla start trading on a post-split basis today and the changes to the Dow Jones Industrial Average announce last week (in – Honeywell, Amgen, Salesforce.com; out – ExxonMobil, Raytheon, Pfizer) take effect today.

The energy sector could attract some attention today on a number of developments. The price of oil is on the rise again, with WTI climbing 1.0% toward $43.40/bbl and Brent crude rising 1.1%. In Canada today, takeover speculation in the oil patch could pick up after Obsidian Energy launched a hostile takeover offer for Bonterra Energy after friendly merger negotiations stalled.

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