Morning Minutes 11/12/2020

Morning Minutes

Stocks and Commodities Slide as Vaccine Rally Fades

November 12, 2020

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

Enthusiasm over the potential for COVID vaccines and treatments to help reopen the economy in the long-term has faded in the face of shorter-term challenges. With case counts continuing to climb and winter approaching, the prospects for targeted rollbacks and new lockdowns continue to rise. Several countries in Europe have already reimposed widespread lockdowns and while the approach in North America to date has been targeted rollbacks, overnight some members of Joe Biden’s team started to float the idea of a possible national US lockdown.

It has also become clear that sectors which could potentially benefit eventually from a vaccine enabling wider reopenings still face challenges in the near term. Southwest Airlines, for example is down 2.5% in premarket trading after management indicates that after a few months of modest improvements, booking trends have softened through to the end of the year.

That being said, US weekly employment trends continue to steadily improve. Weekly initial jobless claims (709K vs street 735K and previous 757K) and continuing claims (6.78M vs street 6.90M and previous 7.22M) both showed improvements from last week and beat street expectations.

This morning finds Dow futures down 0.9%, S&P futures down 0.5% and NASDAQ futures flat after a 2% bounce yesterday. Over in Europe, the Dax is down 1.5% while the FTSE is down 1.0%. In commodity action, WTI and Brent Crude Oil are steady while Copper is up 0.4%. Gold is up 0.4% but remains below $1,900/oz.

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