Morning Minutes 10/15/2020

Morning Minutes

Stocks Slide as Coronavirus Concerns Overshadow Earnings Season

October 15, 2020

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

European markets are leading the world lower this morning with the Dax diving 2.8% and the FTSE falling 2.0%. With the second wave of COVID in full swing, France declaring a new state of emergency and the UK putting on new restrictions recently, concerns that the recent economic rebound could slow or reverse course have started to grow. Continuing uncertainty surrounding the US election and stimulus talks doesn’t appear to be helping matters either.  Commodities are also under pressure with WTI crude oil falling 3.6% and dropping back under $40.00/bbl. Copper is down 0.5% but holding above $3.00/lb. The US Dollar is on the rebound, gaining 0.6% against gold, 2.3% against silver, 0.7% against the pound, 0.5% against the loonie and 0.3% against the euro.

On this side of the pond, positive earnings reports appear to be cushioning the impact but haven’t been enough to turn the tide. US index futures are down 1.0% to 1.5% this morning, adding to yesterday’s 0.6% to 0.8% losses. Several companies beat the street on earnings today including Morgan Stanley ($1.66 vs street $1.28), Walgreens Boots ($1.02 vs street $0.96), and Alcoa (-$1.17 vs street -$1.38). United Airlines (-$8.16 vs street -$7.53) posted a worse than expected loss, blaming ongoing struggles in the airline sector.

Today’s US economic data is mixed. US initial jobless claims were worse than expected (898K vs stret 825K) but continuing claims were better than expected (10.018M vs street 10.700M). The Empire State Manufacturing Index was worse than expected (10.5 vs street 15.0) but the Philadelphia Fed Manufacturing Survey was better than expected (32.3 vs street 14.0).

Later today, earnings are due from Paypal, followed by Honeywell and Schlumberger tomorrow morning. Friday also brings the monthly US retail sales report.

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