Morning Minutes 9/23/2020

Morning Minutes

Stock Market Rebound, US Dollar Rally, RBNZ comments and Nike Earnings

September 23, 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 have turned upward overnight, shrugging off mixed economic numbers and focusing instead on strong earnings from Nike and comments from President Trump who indicated that the US does not intend to reimpose widespread lockdowns again.

Building on overnight gains of 2.4% for Sydney, 2.2% for London and 1.5% for Frankfurt, Dow futures are up about 200 points or 0.75%, while S&P futures are up 0.3%. NASDAQ futures are currently down 0.1% as it pauses to digest yesterday’s 1.7% rally. Commodity action is mixed with crude oil contracts up slightly but copper falling 1.2%.

Flash PMI reports are out this morning, the first look at economic conditions into September and results have been mixed. Germany for example, had stronger than expected flash Manufacturing PMI (56.6 vs street 52.5) but weaker than expected flash Service PMI (49.1 vs street 52.5). Meanwhile, Australia retail sales plunged 4.2% over month in August reminding everyone that new lockdowns could come with a hefty economic price tag. US Markit flash manufacturing reports are due at 9:45 am today with investors expecting readings of 53.2 for manufacturing and 54.7 for non-manufacturing.

Athletic footwear and clothing producer Nike is up 12.4% in premarket trading today after reporting strong results. Boosted by an 82% increase in online sales, revenues ($10.6B vs street $9.2B) and earnings per share ($0.95 vs street $0.47) came in well above analyst expectations.

Gold and Silver are getting crushed this morning, diving 1.2% and 4.1% respectively on what looks like a combination of improving investor confidence and a rebounding US Dollar. The greenback is up 0.3% against the Canadian Dollar today and steady against the Euro. The Australian and New Zealand Dollars are down 0.8% and 0.7% respectively today against the US Dollar as investors speculate current lockdowns may put pressure on their central banks to increase monetary stimulus. Overnight the Reserve Bank of New Zealand held its 0.25% benchmark rate but indicated the potential for negative rates in future and that it may need to increase/broaden its asset purchase programs.

Canada’s Throne Speech is scheduled for this afternoon, followed by a live TV broadcast with PM Trudeau this evening which could impact trading in Canadian Dollar pairs through the day. The government is widely expected to announce a number of new/extended economic support measures for individuals and the provinces, and outline its economic priorities.

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