Morning Minutes 11/5/2020

Morning Minutes

Post-Election Rally Continues Plus Central Banks and Earnings 

November 5, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Index futures are up for a fourth straight day as the November election rally continues. The Presidential part of the election remains unresolved with the momentum shifting to Joe Biden as vote counting continues, but the likelihood of recounts and legal challenges from President Trump also increasing.

The positive reaction from equities to the election despite the increasing uncertainty at the top of the ticket suggests that investors are focusing more on the prospect that a tightly gridlocked Congress could push both parties toward the center and make it difficult to enact or implement the more extreme parts of either platform.

Once again, NASDAQ futures are leading the charge, climbing 2.6% and looking to add to yesterday’s 3.8% advance. S&P futures are up 1.8% adding to yesterday’s 2.2% gain. Overseas markets have also been climbing overnight and this morning. The Hang Seng soared 3.25%, the Nikkei climbed 1.7%, Dax is up 1.5%, and the FTSE is up 0.5%.

US election uncertainty does appear to be flaring up in currency trading today with the US Dollar selling off. The greenback is currently down 1.0% against the Euro, and down 0.7% against the Canadian Dollar, Pound and Yen. Precious metals are soaring today with gold up 1.8% and silver up 4.3% on a combination of USD weakness and new monetary stimulus out of the UK. Commodity action has been mixed with WTI Crude Oil falling 0.8% but copper climbing 0.2%.

Central banks are in the news today, headlined by the Bank of England who has increased their asset purchase (QE) target by £150B to £1.2T amid a new round of lockdowns in the UK. The US Fed Open Market Committee announces its latest monetary policy decision at 2:00 pm EDT today. With the election result still in question, the Fed is unlikely to announce any changes today but it could update investors on the economy and hint toward future.

Earnings season continues to roll on with another flurry of results from both sides of the border. Canadian Tire reported stellar earnings of $4.93 up 42% from a year ago, driven by a 25% increase in same store sales. Management also announced a 3.2% dividend increase. In the US, General Motors is up 6.0% premarket after reporting particularly strong earnings per share ($2.83 vs street $1.38) boosted by a stronger than expected recovery in sales, particularly for trucks and SUVs.

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