Morning Minutes

Canadian Bank Earnings Preview

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As Canada returns to trading from a long weekend, US markets are looking up for a second straight day as Americans prepare for this coming weekend’s Memorial Day holiday and the kickoff to summer driving season. Building on Monday’s gains of 1.4% for the NASDAQ, 1.0% for the S&P 500, and 0.5% for the Dow Industrials, US index futures are up another 0.2% to 0.5%.

It’s a quiet day so far for corporate earnings and economic news. The next events of note are tonight’s Reserve Bank of New Zealand meeting which may give investors an indication of whether they are prepared to start winding down stimulus like the Bank of Canada, hinting toward ending stimulus like the Bank of England, or staying the course on QE and not worrying about inflation like the Fed.

Canadian bank earnings season starts tomorrow with Bank of Montreal reporting, followed by Royal Bank, TD Bank, and CIBC Thursday, and National Bank on Friday. This quarter includes results for April which may give an indication on how much of an impact the latest round of lockdowns have had on the Canadian economy. Softness in Canada, however, could be partly offset by exposure to the reopening US economy for some of the banks, with wealth management and investment banking/trading also having the potential to swing overall results. Investors may be particularly interested in whether Canadian banks reduce loan loss provisions and free up capital for lending as many of their US counterparts did when they reported results last month.

Commodities are down slightly this morning with WTI crude oil sliding 0.4% and copper down 0.1%. Cryptocurrencies are under pressure again with Bitcoin falling 5.0% and Ethereum down 6.4%.

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Colin Cieszynski, Chief Market Strategist

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

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