Morning Minutes

Natural Gas Rally, Air Canada News and Disney Earnings In Focus

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With several Asia Pacific markets closed today for the Lunar New Year holiday and a long weekend approaching in North America, trading for the most part has been relatively quiet overnight and into this morning. US index futures are down 0.1%, while in Europe, the FTSE is up 0.1% and the Dax is down 0.4%.

The most significant move today has been another rally for natural gas, which is up another 1.8% as temperatures remain frigid in many parts of North America, boosting home heating demand. Other commodities are trading flat to lower today, including declines of 0.3% for copper, 0.6% for WTI crude oil, and 1.2% for platinum.

Providing more evidence of a significant divergence in business conditions across industries, Air Canada announced that it lost $1.16B in Q4 as the airline reported a 73% plunge in passengers in 2020 versus 2019. Revenues of $827M came in short of the $885M the street had been expecting and it remains unclear what the impact of new testing and quarantine rules for air travelers may have on revenues into Q1 and beyond. On a positive note, the Canadian government approved Air Canada’s planned $190M purchase of charter rival Transat.

In the US today Walt Disney’s earnings are in the spotlight after the company reported a surprise profit. EPS of $0.32 came in well above the street expectation of a $0.41 loss. Revenues also beat the street ($16.2B vs street $15.9B). Strong paid subscriber growth at Disney+ to 95 million offset weakness in the parks and cruise divisions which continued to be impacted by lockdowns and travel restrictions.

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Colin Cieszynski, Chief Market Strategist

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

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