Morning Minutes

Relief Rally Extends to a Second Day on Positive Earnings




The market rebound which started yesterday has continued overnight and into this morning. US index futures are currently up 1.9%-2.4%, adding to yesterday’s gains of 1.8%-3.4%.   Overseas stock markets have also been rallying including gains of 1.8% for the Hang Seng, 1.4% for the Nikkei, 1.4% for the Dax and 1.0% for the FTSE.

It is interesting that the equity market gains come despite the US 10-year treasury note yield climbing back up above 4.00%, and China delaying the reporting of the GDP, retail sales, and industrial production data that was due overnight. New Zealand reported higher than expected inflation (7.2% vs street 6.6%), maintaining the pressure on central banks to keep tightening monetary policy.  This morning, Canada housing starts came in strong (299K vs street 263K). US industrial production is due at 9:15 am EDT.

Investors appear to be responding more to positive earnings from Goldman Sachs ($8.25 vs street $7.69) where stronger trading results offset weakness in investment banking, and Johnson & Johnson ($2.55 vs street $2.48). After the close today, results are due from Netflix and United Airlines. Travelers and Procter & Gamble are among tomorrow morning’s headliners.

Action in commodities has been mixed this morning. In metals, copper is down 0.6% while gold is down 0.3%. WTI Crude oil is down 0.3% while natural gas is up 0.3% as it tries to recover from yesterday’s big drop. Currencies are quiet except for a 0.4% drop for the British Pound.

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Colin Cieszynski, Chief Market Strategist

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

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