The start of the new trading week finds oil contracts in rally mode with WTI up 6.5% and regaining $80.00/bbl, while Brent is up 6.3% and trading just below $85.00/bbl. Over the weekend, OPEC+ announced a surprise production cut of 1.13mmbbl/d to start this month and run through the end of this year. OPEC+ had been widely expected to stick to the 2 mmbbl/d of previously implemented cuts so this move indicates a continued commitment to manage the market through changes in demand.   

US index futures are mixed today with Dow Futures up 0.3% and NASDAQ futures down 0.8%. Another change in sector leadership may be underway as the Energy sector is rallying in premarket action with gains for majors varying between 4.0% for Exxon Mobil and 7.1% for Halliburton. In Europe today, the Dax is flat and the FTSE is up 0.6%. In metals action, Gold is up 0.5% as it takes another run at the $2,000/oz level, while Copper is down 0.25%.   

Manufacturing PMI reports have been rolling out from around the world overnight. For the most part, numbers from European and Asia Pacific countries have been in between 45.0 and 50.0 indicative of a moderate contraction. Results have been split nearly 50-50 between beats and misses relative to street expectations, with the UK missing slightly and Germany beating slightly. Canadian Manufacturing PMI (street 51.7 vs previous 52.4) and US ISM Manufacturing PMI (street 47.5 vs previous 47.7) are due at 9:30 and 10:00 am EDT respectively. US construction spending (street 0.0% vs previous -0.1%) is also due mid-morning.  

The US 10-year treasury note yield is steady near 3.50% this morning. Tonight, the Reserve Bank of Australia is expected to officially pause its rate hike program at 3.60% after hinting toward a pause at its last meeting. It’s a busy week for economic news headlined by Service PMI reports and US ADP Payrolls on Wednesday, Canadian Employment on Thursday and US Nonfarm Payrolls on Friday morning, a rare holiday release.  

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Colin Cieszynski, Chief Market Strategist

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

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