Category: Morning Minutes

Stock markets around the world continue to crumble this morning with a witches’ brew of uncertainty over COVID Wave 2 and the potential for more new lockdowns combined with the US election continue to drive investors to the sidelines. Over in Europe, Frankfurt, Paris, and Milan are all down about 3.0% while London is down 1.8%. Coming off of a mixed Tuesday where bulls were unable to mount much of a counterattack, US index futures have turned downward again to the tune of 1.6% to 2.1% declines with Dow Futures falling nearly 600 points.

Once again positive earnings reports out of the US are being met with yawns from investors indicating that investors had already priced in expectations for strong results. Highlights of earnings reports from overnight and this morning include: Microsoft* ($1.82 vs street $1.54, down 2.3% premarket), UPS ($2.28 vs street $1.90, down 2.2% premarket). On the other hand, beleaguered General Electric has responded well to a positive earnings surprise ($0.06 vs street -$0.04, up 7.0% premarket). Results from Suncor Energy, First Quantum, MasterCard, Visa and Ford are due later today ahead of another flood of results tomorrow.

A busy 24 hours for central banks starts with the Bank of Canada releasing its latest monetary policy decision and statement at 10:00 am EDT, followed by a press conference at 11:15 am. The Bank is expected to hold interest rates steady at 0.25% but investors may focus on whether the bank feels encouraged enough about financial market or economic conditions to start (or hint toward) slowing down its asset purchase programs or some of the other emergency measures it implemented earlier this year. Tomorrow the Bank of Japan and the European Central Bank also hold regularly scheduled monetary policy decision meetings.

*Shares of Microsoft are held in some portfolios managed by SIA Wealth Management.

 

SIA Wealth Market Outlook Webinar Today October 28, 2:00 pm EDT

Join SIA Wealth Management for an update on the current market, their outlook for the rest of 2020 and how that relates to SIA Wealth Management portfolios. Webinar audio will be available through computer VoIP or dial in using your phone.

Register at:  https://attendee.gotowebinar.com/register/475120275022303504

After registering, you will receive a confirmation email containing information about joining the webinar.

 

SIA Wealth In The Media

Chief Market Strategist Colin Cieszynski recently appeared on BNN Bloomberg where he discussed the recent weakness in North American and European markets.

https://www.bnnbloomberg.ca/video/covid-cases-ramping-up-globally-causing-market-uncertainty-strategist~2064171

World stock markets regained their footing overnight and into this morning. In the wake of yesterday’s 1.6%-2.4% declines in the US and a big plunge in Germany, the Dax, Nikkei, and FTSE are all flat, and US index futures are up 0.3% to 0.6%. Commodities are also on the rebound today with WTI and Brent Crude bouncing 0.75% and 0.6% respectively and copper climbing 0.6%. Gold and Silver remain steady with gold holding just above $1,900/oz.

Many of the uncertainties impacting market sentiment lately including COVID Wave 2, the US stimulus impasse and the US Presidential Election, now only a week away, remain unresolved, but for today investors appear to be focusing more on corporate earnings reports. A positive US Durable Goods September report (1.9% vs street 0.5%) also appears to be helping to shore up support.

Several component companies of the Dow Jones Industrial Average are out with results this morning including Caterpillar ($1.34 vs street $1.18, down 2.0% premarket), 3M ($2.43 vs street $2.26, down 1.1% premarket), Merck ($1.74 vs street $1.44, up 1.2% premarket). A muted response to strong results, however, suggests that either high investor expectations had already priced into stocks, or investors remain unwilling to really step up and respond to good news ahead of the US election.

Restaurant Brands* had a mixed report, beating the street on earnings ($0.68 vs street $0.63) but announcing significant differences in same store sales among its three chains with Tim Hortons down 12.5% from a year ago, Burger King down 7.0% but Popeyes Chicken growing 17.4%. Other earnings reports out today including Eli Lilly missing expectations ($1.54 vs street $1.71, down 4.9% premarket) and motorcycle maker Harley Davidson beating expectations ($1.05 vs street $0.31, up 9.6% premarket). Microsoft* headlines afternoon results today.

Despite the uncertain business environment, companies continue to move forward with acquisitions. Today’s big deal is in the technology sector where Advanced Micro Devices has agreed to purchase fellow chipmaker Xilinx in a $35B arrangement.

*Shares of Restaurant Brands and Microsoft are held in some portfolios managed by SIA Wealth Management.

Stock markets around the world are in retreat to start the new trading week, weighed down by uncertainty over the potential for new full or targeted rollbacks/lockdowns as COVID cases continue to climb in several countries. US political uncertainty may also be having an impact on sentiment with the election a week from tomorrow, and stimulus talks still dragging on. Supreme Court uncertainty may fade with a confirmation vote expected as soon as today.

US Index futures are down 0.9% to 1.0%, giving back all of Friday’s gains and falling further. In Europe today, the DAX has plunged 2.6% after Germany IFO business survey results disappointed, while the FTSE is down a more moderate 0.4%.  Commodities are also under pressure today with WTI and Brent Crude Oil both falling about 2.25% and copper sliding 0.4%.

This morning brings news of a big merger in the struggling Canadian oil patch, with Cenovus Energy agreeing to purchase Husky Energy in an all-stock deal valued at $3.8B, a 21% premium to recent trading. The combined company is expected to become the third largest oil and gas producer in Canada. It’s a light day for corporate news in the US with the amin event being better than expected earnings from toymaker Hasbro ($1.88 vs street $1.63).

Although earnings season has paused for today, it could be seen as the calm before the storm as there are a ton of earnings reports on the way from big companies for the rest of the week. Tomorrow brings results from Microsoft*, Merck and Caterpillar, Wednesday is headlined by credit card companies Visa and MasterCard, plus Boeing. Thursday is a huge day for results including the Super Bowl of Big Tech numbers with Apple*, Alphabet (Google), Amazon.com*, and Facebook all reporting after the close that day. Friday features Big Oil results from Chevron and ExxonMobil.

Its also a busy week for earnings in Canada headlined by Restaurant Brands* on Tuesday, Suncor Energy on Wednesday, Shopify on Thursday and Imperial Oil on Friday.

In economic news, central banks take the spotlight with the Bank of Canada meeting on Wednesday, followed by the Bank of Japan and the European Central Bank on Thursday. While none of the banks are expected to make any major policy changes, commentary related to economic/financial conditions and the outlook may attract attention from investors.

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

Friday morning finds stock markets around the world trending upward. Over in Europe, the Dax is up 1.1% and the FTSE is up 1.6%. Here in North America, US index futures are up 0.2% to 0.3% adding to yesterday’s gains of 0.2% to 0.5%.  Commodities are steady with WTI and Brent Crude Oil up about 0.4% after Russia indicated openness to extending output cuts, while copper is flat so far. Currency trading is mixed with the Euro (up 0.3%) and Pound (down 0.3%) heading in opposite directions against the US Dollar while gold and silver are up 0.6% and 0.9% respectively

With last night’s final US Presidential Debate in the books, the final leg of the campaign is now underway. Congress continues to haggle over stimulus but it’s uncertain what it would take to make a deal with the election now only 11 days away. Investors are responding positively to progress on a treatment. Gilead Sciences is up 4.2% premarket after the FDA gave its Remdesivir coronavirus treatment full marketing approval, up from emergency use only approval.

The main economic news out today is flash PMI reports, the first look at October economic conditions in the US and Europe. European numbers were split with Flash Manufacturing PMI reports for Germany and France above 50 in expansion territory and above expectations, while Flash Service PMI numbers for both countries were below 50 in contraction territory and below expectations. This suggests that COVID Wave Two may be having a bigger impact on the service sector so far than the manufacturing sector, especially with politicians focusing on targeted closures, rather than widespread, lockdowns. US flash PMI numbers are due at 9:45 am EDT today with the street expecting readings of 53.4 for Manufacturing and 54.3 for Non-Manufacturing.

Earnings reports and the reaction to them has been mixed this morning. Intel is down 10.0% in premarket trading after reporting in-line earnings as investors focused more on disappointing sales from its data center division. American Express ($1.30 vs street $1.35) missed expectations on earnings while Seagate Technology missed on sales. Toymaker Mattel is up 7.0% premarket after beating earnings expectations ($0.95 vs street $0.39).

This morning finds stock markets still stuck in neutral, supported by another round of positive earnings reports but held back by political uncertainty and an apparent reluctance among investors to commit to a direction ahead of the US election which is now only 12 days away. US index futures are down 0.1% adding slightly to yesterday’s 0.3% declines, while over in Europe, the FTSE and Dax are both down about 0.2%. Commodity markets have reversed their direction of the last couple of days with WTI and Brent crude oil both bouncing 0.8% and copper pulling back 1.4%. Gold is down 1.1% sitting just above $1900/oz.

US weekly jobless claims (787K vs street 860K) and continuing claims (8.37M vs street 9.50M) both came in better than expected this morning, indicating the US job market continues to recovery. Tomorrow morning brings flash PMI reports, the first early peek at October economic activity in the US and Europe.

Several companies beat the street on earnings overnight and this morning including: Rogers Communications ($1.08 vs street $0.78), Tesla ($0.76 vs street $0.57,up 4.2% premarket), Coca-Cola ($0.55 vs street $0.46), homebuilder PulteGroup ($1.34 vs street $1.12), chemical producer Dow ($0.50 vs $0.33), appliance producer Whirlpool ($6.91 vs street $4.20) and Chipotle Mexican Grill* ($3.76 vs street $3.47).

More earnings reports are due on both sides of the border this afternoon, headlined by Intel, Expedia, and Union Pacific in the US. Tomorrow morning brings results from American Express.

*Shares of Chipotle Mexican Grill are held in some portfolios managed by SIA Wealth Management.

Stock markets around the world have been mixed overnight as investors react to a mixed bag of earnings reports and US politicians still haggling over stimulus. This morning finds US index futures flat to down 0.2%, while in Europe, the Dax is down 0.9% and the FTSE is down 1.2%. Asia Pacific trading saw the Nikkei gain 0.3% and the Hang Seng rise 0.75%. Further reflecting an indecisive mood among investors, commodities are also mixed with WTI and Brent Crude Oil falling 1.7%-1.8% but copper rising another 1.1%. Currency action finds the Japanese Yen and British Pound posting gains of 0.7% and 0.8% against the US Dollar today while gold, silver, the Euro and the Canadian Dollar are flat to up 0.2% against the greenback.

Canadian retail sales rose by 0.4% over month In August, a slowdown from July’s 1.1% growth and short of the 1.1% the street had been expecting.

Earnings season continues to ramp up today. Canadian National Railway missed street EPS expectations ($1.38 vs $1.54 and year ago $1.66. The railroad noted increased volumes in lumber, grain and autos offset by reduced petroleum shipments.

Netflix is down 5.5% in premarket trading today after the streaming service disappointed on EPS ($1.74 vs street $2.14) and global net subscriber additions (2.20M vs street 3.57M), although revenues exceeded expectations slightly ($6.44B vs street $6.38B). For next quarter, management guided for 6.0M in subscriber additions, down from 8.8M in Q42019.

Several other companies have posted positive reports today including: Snap ($0.01 vs street -$0.05, up 20.8% premarket), Thermo Fisher* ($5.63 vs street $4.61), Texas Instruments ($1.45 vs street $1.28), Verizon ($1.25 vs street $1.22). In case anyone was wondering what consumer are spending money on these days, recreational vehicle producer Winnebago ($1.45 vs street $0.93) and vacuum cleaner producer iRobot ($2.58 vs street $1.00) both crushed street estimates.

Later today, results are due from Tesla Motors, Chipotle Mexican Grill, Whirlpool, CSX and others.

*Shares of Thermo Fisher are held in some portfolios managed by SIA Wealth Management.

While overnight trading was mixed in the wake of yesterday’s US market decline of 1.4%-1.6% for major indices, US stocks have been bouncing back a bit this morning with index futures rising 0.2% to 0.4%. Another round of better than expected earnings reports have been helping to shore up investor confidence. Speculation over whether US politicians can reach a stimulus deal before today’s deadline for getting a deal done before Election Day, has pushed markets in different directions at different times over the last 24 hours.

Earnings season kicks off in Canada today with railroad Canadian Pacific scheduled to report results this morning followed by competitor Canadian National this afternoon. In the US, several senior companies have reported stronger than expected results overnight including: insurer Travelers ($3.12 vs street $3.06), Procter & Gamble ($1.63 vs street $1.42), Logitech ($1.87 vs street $0.57, up 17.3% premarket) and Lockheed Martin ($6.25 vs street $6.09). After the close this afternoon, Netflix, Texas Instruments, and Snap are scheduled to report results.

Overnight economic news has been mixed. The Peoples’ Bank of China held interest rates steady. In the US disappointing housing starts was offset by stronger than expected building permits. Commodities trading has also been mixed with the most interesting development being a 1.1% gain for copper which suggests that investor expectations for the global economy and resource demand remain optimistic despite all of the political and medical noise out there at the moment.

The new trading week is off to a flat to slightly positive start so far as investors digest a number of weekend developments, much of which centers around progress (or lack of progress) around deal making across a number of fronts.

US index futures are up 0.6% to 1.0% this morning after House Chair Nancy Pelosi has set a Tuesday deadline for reaching a stimulus deal before the US election. Over in Europe, however, the Dax is down 0.2% and the FTSE is down 0.3% as the UK and EU remain at loggerheads over a new trade deal with the risk of a potentially disruptive No-Deal Brexit looming ahead. WTI and Brent Crude oil are flat today with WTI holding above $40.00/bbl ahead of an OPEC call where no major decisions are expected but producers could hint at their thoughts about what to do about supply levels in the coming months including how to bring Libya back into the market with a previous blockade having been lifted.

Asia Pacific trading saw mixed returns with Tokyo rallying 1.1% and Hong Kong gaining 0.6% but Shanghai falling 0.7%. Overnight China released mixed economic numbers headlined by its Q3 GDP growth of 4.9% over a year ago which was worse than the 5.2% growth the street had expected by an improvement on the previous quarter’s 3.2% growth rate. Monthly indicators came in better than expected including retail sales (3.3% vs street 1.8%) and industrial production (6.9% vs street 5.8%).

Corporate news today has been focused on earnings and attempts at deal making. Oilfield service giant Halliburton beat earnings expectations ($0.11 vs street $0.08). Keeping with the oil patch, ConocoPhillips announced a deal to purchase Concho Resources for $9.7B in stock. In communications, Altice USA increased its hostile takeover bid for Cogeco to $8.4B from $7.8B which has been rejected by Cogeco’s controlling shareholders. Under the proposed arrangement Altice would keep the US business and sell the Canadian operations to Rogers Communications.

Earnings season starts in Canada this week with the two big railroads reporting on Tuesday, Restaurant Brands on Wednesday and Rogers Communications, Canfor, and Constellation Software headlining Thursday. Earnings season broadens out this week with notable reporters including Netflix on Tuesday, Tesla Motors on Wednesday and Intel plus Amazon.com on Thursday.

It’s a light week for economic news with the main events being Canadian retail sales on Wednesday and Flash PMI reports, the first peek at October economic activity in the US and Europe, on Friday.

Building on morning gains in Europe where the Dax is up 1.0% and the FTSE is up 1.4%, US index futures are in the green this morning with gains of 0.40% to 0.50% as they bounce back from yesterday’s 0.00% to 0.50% declines for major US indices.

Positive economic news has helped to boost investor confidence this morning. US retail sales for September came in much better than expected (1.9% vs street 0.7% and previous 0.6%) indicating that reopening recovery momentum has continued. Meanwhile north of the border, the Bank of Canada indicated late yesterday that it plans to reduce or end some of its emergency operations related to mortgage bond purchases, repos and bankers’ acceptances, citing improved operational conditions in financial markets.

Earnings season continues today with oilfield service giant Schlumberger ($0.16 vs street $0.13) plus Intuitive Surgical ($2.77 vs street $2.07) beating expectations. Boeing is up 5.5% in premarket trading after European authorities cleared the troubled 737-MAX-8 aircraft to start flying with passengers again

European markets are leading the world lower this morning with the Dax diving 2.8% and the FTSE falling 2.0%. With the second wave of COVID in full swing, France declaring a new state of emergency and the UK putting on new restrictions recently, concerns that the recent economic rebound could slow or reverse course have started to grow. Continuing uncertainty surrounding the US election and stimulus talks doesn’t appear to be helping matters either.  Commodities are also under pressure with WTI crude oil falling 3.6% and dropping back under $40.00/bbl. Copper is down 0.5% but holding above $3.00/lb. The US Dollar is on the rebound, gaining 0.6% against gold, 2.3% against silver, 0.7% against the pound, 0.5% against the loonie and 0.3% against the euro.

On this side of the pond, positive earnings reports appear to be cushioning the impact but haven’t been enough to turn the tide. US index futures are down 1.0% to 1.5% this morning, adding to yesterday’s 0.6% to 0.8% losses. Several companies beat the street on earnings today including Morgan Stanley ($1.66 vs street $1.28), Walgreens Boots ($1.02 vs street $0.96), and Alcoa (-$1.17 vs street -$1.38). United Airlines (-$8.16 vs street -$7.53) posted a worse than expected loss, blaming ongoing struggles in the airline sector.

Today’s US economic data is mixed. US initial jobless claims were worse than expected (898K vs stret 825K) but continuing claims were better than expected (10.018M vs street 10.700M). The Empire State Manufacturing Index was worse than expected (10.5 vs street 15.0) but the Philadelphia Fed Manufacturing Survey was better than expected (32.3 vs street 14.0).

Later today, earnings are due from Paypal, followed by Honeywell and Schlumberger tomorrow morning. Friday also brings the monthly US retail sales report.