Morning Minutes 9/21/2020

Morning Minutes

Stocks Slide, USD Soars as Political and Economic Uncertainty Increases

September 21, 2020

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

Stock markets around the world are trading lower to start the week amid mounting uncertainty. The passing of US Supreme Court Justice Ginsburg has added an extra layer of complexity to the US political situation with a potential confirmation process adding to the stakes and uncertainties of stimulus talks and the Presidential Election campaign. US Index futures are down 1.6% to 2.2% this morning with Dow Futures falling over 600 points so far.

Meanwhile, over in Europe, markets are down even more with the FTSE falling 3.1% and the Dax dropping 3.0% as investors weigh rumblings of new potential economic restrictions as COVID cases start to climb once again. The impact of economic uncertainty on resource demand has been weighting on commodity markets this morning with WTI and Brent Crude Oil both falling about 2.2% and Copper dropping 1.0%.

Growing uncertainty and volatility in world markets has sparked a move of capital back into US Dollars today. The greenback is up 1.3% against Gold, 2.75% against Silver, 0.3% against the Canadian Dollar, and 0.5% against both the Euro and the British Pound.

One positive development over the weekend, however was that President Trump agreed to the reorganization of TikTok and the creation of a US company to be owned 12.5% by Oracle and 7.5% by Walmart. In premarket action Oracle is up 3.4% while Walmart is up 1.0%.

There are a number of potential developments which could influence markets through the week. The economic calendar is pretty light with most of the focus on flash PMI reports (the first look at economies in September), which are due on Wednesday, plus US durable goods on Friday. The earnings calendar is also light, headlined by Nike Tuesday, plus Blackberry and Costco on Thursday.

Politics may also influence sentiment through the week. In Canada, the Throne Speech is scheduled for Wednesday with the federal government expected to outline its fiscal priorities for the coming months which may include comments on support for individuals, support for the provinces and other responses to the COVID-19 pandemic. In the US, President Trump may announce a Supreme Court candidate which would kick off a confirmation process. Also Fed Chair Powell is expected to testify to Congress later in the week but this may get overshadowed by other events including the Fed’s projections and announcements from last week.

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