Morning Minutes 11/23/2020

Morning Minutes

Stocks Tread Water, Oil Climbs as US Thanksgiving Week Begins

November 23, 2020

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

The start of a short trading week in the United States which usually sees trading slow down Wednesday afternoon as market players usually leave town ahead of Thursday’s turkey and football bonanza, and Black Friday’s shortened (and frequently very quiet) trading session.  US index futures are up 0.4%-0.6% this morning, essentially clawing back Friday’s 0.4% to 0.7% losses. In Europe today, the Dax is up 0.6% while the FTSE is flat.

Investors continue to respond favorable to positive COVID vaccine/treatment developments, which AstraZeneca and Oxford University reporting positive clinical trial results of their vaccine with 62%-90% of patients producing antibodies, with the variance due to different dosages. Meanwhile, Pfizer’s vaccine continues to move through the approval process and Regeneron Pharmaceuticals has received emergency use approval in the US for its COVID antibody treatment.

In economic news this morning, flash PMI reports for Europe are out, the first look at economies in November. Results were mixed, which is not a surprise considering that several countries across the continent have gone back into lockdown, but not as bad as the numbers seen back in the spring. The service sector appears to have been hit harder this month with UK flash service PMI falling back under 50 into contraction territory, but not as much as expected (45.8 vs previous 51.4 and street 42.5), while service numbers for Germany and France also dropped deeper into contraction territory. On the manufacturing side, the UK (55.2 vs street 50.5) and Germany (57.9 vs street 56.5) both held above 50 in expansion territory and beat street expectations. US flash PMI reports are due at 9:45 am EDT with street expecting manufacturing to hold steady near 53.0 but the service side to slow to 55.3 from 56.9.

Commodities are also mixed this morning. WTI and Brent crude oil are up 1.0% and 1.4% respectively, with investors looking for OPEC+ to delay production increases planned for January at next week’s meetings. Copper is down 0.6%. Precious metals continue to struggle with gold down 0.5% and silver down 1.0%.

As mentioned above, this is a short week for trading in the US due to the Thanksgiving holiday, with the spotlight for news falling mainly on the retailing sector. In the first half of the week, retailers dominate the earnings calendar while in the second half of the week, the focus turns to Black Friday consumer spending and how that shakes out between in-person and online sales amid increasing restrictions in many parts of North America. Wednesday looks to be a busy day for economic news ahead of holiday closures at government offices, headlined by FOMC minutes, jobless claims, a GDP update, durable goods orders, and new home sales.


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