Morning Minutes 10/21/2020

Morning Minutes

Indices Drift Amid Mixed Earnings Reports

October 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 have been mixed overnight as investors react to a mixed bag of earnings reports and US politicians still haggling over stimulus. This morning finds US index futures flat to down 0.2%, while in Europe, the Dax is down 0.9% and the FTSE is down 1.2%. Asia Pacific trading saw the Nikkei gain 0.3% and the Hang Seng rise 0.75%. Further reflecting an indecisive mood among investors, commodities are also mixed with WTI and Brent Crude Oil falling 1.7%-1.8% but copper rising another 1.1%. Currency action finds the Japanese Yen and British Pound posting gains of 0.7% and 0.8% against the US Dollar today while gold, silver, the Euro and the Canadian Dollar are flat to up 0.2% against the greenback.

Canadian retail sales rose by 0.4% over month In August, a slowdown from July’s 1.1% growth and short of the 1.1% the street had been expecting.

Earnings season continues to ramp up today. Canadian National Railway missed street EPS expectations ($1.38 vs $1.54 and year ago $1.66. The railroad noted increased volumes in lumber, grain and autos offset by reduced petroleum shipments.

Netflix is down 5.5% in premarket trading today after the streaming service disappointed on EPS ($1.74 vs street $2.14) and global net subscriber additions (2.20M vs street 3.57M), although revenues exceeded expectations slightly ($6.44B vs street $6.38B). For next quarter, management guided for 6.0M in subscriber additions, down from 8.8M in Q42019.

Several other companies have posted positive reports today including: Snap ($0.01 vs street -$0.05, up 20.8% premarket), Thermo Fisher* ($5.63 vs street $4.61), Texas Instruments ($1.45 vs street $1.28), Verizon ($1.25 vs street $1.22). In case anyone was wondering what consumer are spending money on these days, recreational vehicle producer Winnebago ($1.45 vs street $0.93) and vacuum cleaner producer iRobot ($2.58 vs street $1.00) both crushed street estimates.

Later today, results are due from Tesla Motors, Chipotle Mexican Grill, Whirlpool, CSX and others.

*Shares of Thermo Fisher are held in some portfolios managed by SIA Wealth Management.

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