SIA Wealth Morning Minutes Banner

Manufacturing/Service Economy Divide, and Retail Sales In Focus

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook
Share on email
Email

US index futures are up 0.3%-0.5% this morning, clawing back much of yesterday’s 0.4%-0.7% losses by the three main US market indices. European markets are also bouncing back today with the Dax up 0.7% and the FTSE up 0.2%.  

Economically sensitive commodities such as copper, up 2.0%, platinum, up 0.4% and lumber, which has reached $1,000 per thousand board feet today, are climbing as well. Energy contracts, on the other hand, are backsliding today as the impact of recent weather storms on supply and demand starts to fade. WTI crude oil is down 1.9% while Natural Gas is down 0.5% and heating oil is down 0.6%.

Investors appear to be taking some comfort from flash PMI reports from overseas. The first peek into February economic conditions suggests a robust manufacturing economy with flash manufacturing reports for Japan (back above 50 into expansion territory, 50.6 vs street 49.7), Germany (60.6 vs street 56.5), France (55.0 vs street 51.4) and the UK (54.9 vs street 53.2) all coming in significantly stronger than expected.

Service flash PMI reports, however, remained below 50 in contraction territory and below expectations for Germany (45.9 vs street 46.5) and France (43.6 vs street 47.0), although the UK came in better than feared (49.7 vs street 41.0 and previous 39.5). This suggests that lockdowns have been having more of an impact on the service side of the economy than on manufacturing.

Investors may look to the US for additional signs of life with flash manufacturing (street 58.5 vs previous 59.2) and flash services (57.5 vs street 58.3) both due at 9:45 am EST.

In other economic news, retail sales reports for Canada (December -3.4% vs street -2.5% and previous 1.3%) and the UK (January -8.2% vs street -2.5%) were disappointing, offsetting positive US January retail sales and stronger than expected Walmart earnings from yesterday as investors await next week’s flurry of earnings reports from US retailers.

Speaking of earnings, two reports of note are out this morning. Auto parts producer Magna International* posted positive results (EPS $2.83 vs street $2.02, sales $10.5B vs street $9.4B, 7.5% dividend increase, up 6.5% premarket), along with farm equipment producer Deere ($3.87 vs street $2.14, up 5.6% premarket).   

*Shares of Magna International are held in some portfolios managed by SIA Wealth Management

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook
Share on email
Email

At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Colin Cieszynski, Chief Market Strategist
Market Commentary:

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

Keep Reading

INTERNET EXPLORER NOTICE