Morning Minutes 10/29/2020

Morning Minutes

US Stocks Stabilize After Selloff with GDP, Earnings and Central Banks In Focus

October 29, 2020

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

Overnight and into this morning, stock markets have been trying to regain their footing in the wake of yesterday’s selloff which saw the nearly all of the stocks in the S&P 100, NASDAQ 100 and S&P/TSX 60 post losses on the day. In Europe, uncertainty surrounding COVID Wave Two continues to weigh on indices with the FTSE falling 0.1% and the Dax dropping another 0.4%.

US index futures are mixed today so far varying between a loss of 0.1% for Dow futures to a gain of 0.6% for NASDAQ futures as they try to regain their footing after yesterdays plunges of 3.4% to 3.7% for the major US indices, and have picked up some support from positive US economic news. The US economy roared back to life during the summer as Q3 GDP rebounded 33.1%, beating the 31.0% street estimate, after plunging 31.4% in Q2. US jobless claims of 751K were better than the 775K street estimate. Continuing claims of 7.756M were slightly worse than street expectations, but still improved on last week’s 8.465M

Currency action is mixed today with the US Dollar falling against the Yen but gaining on the Euro and Pound, plus Gold and Silver. In commodity action, crude oil is getting crushed again with WTI and Brent both diving down about 3.9%, while copper is down 0.4% as traders fret about the impact of current events on resource demand.

The Loonie has stabilized after plunging yesterday, impacted by the falling price of commodities and also yesterday’s mixed news from the Bank of Canada who bullishly cut the pace of its asset purchases to $4B per week from $5B per week but indicated the potential for a sluggish economy and low interest rates into 2023. The Bank of Japan stayed the course in its meeting overnight and at the time of writing we are still waiting to hear from the European Central Bank on its monetary policy plans.

Its another big day for earnings reports. Shopify is up 2.8% premarket after beating the street on both sales ($757M vs street $653M) and earnings per share ($1.13 vs street $0.51). Other companies exceeding expectations include: Pinterest* ($0.10 vs street $0.03, up 32.8% premarket), Visa ($1.12 vs street $1.09), Amgen ($4.37 vs street $3.81), Tapestry ($0.58 vs street $0.23), and Comcast ($0.65 vs street $0.52, up 2.9% premarket). Energy stocks continue to struggle.  Suncor Energy (-$0.20 vs street -$0.11) and Cenovus Energy ($450M asset impairment charge) both reported disappointing results.

Another flurry of earnings results is due after the close today. The technology sector is in the spotlight with results due from Apple*, Amazon.com*, Alphabet, Facebook and Twitter. Results from Big Oil are also due over the next 24 hours, headlined by ExxonMobil, Imperial Oil, ConocoPhillips and Chevron. Other results still due by the end of the week include Starbucks, Domtar and Honeywell.

*Shares of Apple, Amazon.com and Pinterest are held in some portfolios managed by SIA Wealth Management.

 

New Video: Market Commentary and Portfolio Strategy – October 28, 2020

With Jeremy Fehr – Founder and CEO of SIA Wealth Management and Jason Leesui, Executive Vice President of SIA Wealth Management

A new webinar replay is available featuring Jeremy Fehr discussing current trends in world markets, and Jason Leesui discussing portfolio strategy. A PDF version of the presentation is available.

GoToMeeting Version: https://attendee.gotowebinar.com/recording/2214725791708752396

YouTube Version: https://youtu.be/V300GLmiSQM

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