Morning Minutes 11/16/2020

Morning Minutes

Dow Challenges 30,000 on Positive Trade and Vaccine News

November 16, 2020

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

Today has the potential to be a historic day with the Dow Jones Industrial Average approaching the 30,000 for the first time with Dow Futures up over 500 points or 1.75% this morning.

Stock markets around the world are rallying to start the week, propelled upward by two positive developments. First, 15 Asia Pacific countries including China, Japan, Australia, New Zealand, South Korea and 10 ASEAN national all entered into a new trade deal which sparked rallies of 2.5% for Tokyo, 2.0% for Seoul, 1.75% for Sydney and 1.1% for Shanghai. Economic news out of China was mixed with industrial production beating expectations (6.9% vs street 6.5%), but retail sales recovering but at a slower pace than expected (4.3% vs street 5.0% and previous 3.3%).

Advances have accelerated this morning after Moderna become the second company to announce positive vaccine results this month, claiming 94% effectiveness from preliminary Phase 3 test results. Moderna shares are up 16.2% in premarket action with premarket interest also being reignited in sectors which had been heavily impacted by COVID shutdowns including airlines, cruise lines, hotels/casinos and energy. With NASDAQ futures down 0.1%, compared with a 1.0% gain for S&P 500 futures, it appears that the change in leadership from a concentration in Big Tech to wider participation, which started in earnest last week has continued into this morning.

These developments appear to have put investors back on to a “risk-on” footing. Commodities have also been climbing today, with copper popping 2.0%, plus WTI and Brent crude oil both soaring about 3.5%. Oil could be active in the coming days with OPEC+ ministers scheduled to meet this week to talk about the state of supply cuts. On the other hand, defensive havens are taking it on the chin again today with Gold diving 0.8% and Silver sliding 1.4%.

This week, the main focus of scheduled news is on the consumer economy. Retail sales figures are due for the US on Tuesday followed by Canada and the UK on Friday. US retailer earnings get underway this week, headlined by Walmart and Home Depot on Tuesday, followed by Lowes and Target on Wednesday, plus Macys on Thursday.

Bank of Canada Governor Tiff Macklem speaks on Tuesday which investors may look to for economic commentary and hints on whether the central bank is looking to continue scaling back its asset purchase programs or to renew stimulus. Toward the end of the week, New Zealand is holding an election which could provide an indication of the public mood in countries coming out of winter lockdowns.


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Best Regards, Jeremy Fehr and the Motacular Moustaches team.

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