Morning Minutes

Service PMI Reports, Earnings, and Leadership Changes In Focus

Business people videocalling and taking notes during meeting
Business people videocalling and taking notes during meeting



Its a mixed day for equity markets around the world so far as investors digest a flurry of economic, political and corporate events. The biggest action so far today has been in Italy where Milan’s bourse is up 2.5% on the news that former ECB President Mario Draghi is preparing to form a “unity” government to deal with the current political, medical and economic crises.  Other major European indices are more or less flat as investors digest a round of service PMI reports which were still slightly below 50 in contraction territory, but not as bad as the street had feared, such as the Eurozone (45.4 vs street 45.0). The FTSE is down slightly today as UK service PMI remained weaker than its continental peers (39.5 vs street 38.8).

US index futures are flat to up 0.7% as stocks consolidate and/or build upon yesterday’s 1.50% gains for US indices. This month’s US ADP private sector payrolls report was much stronger than expected with jobs increasing by 174K in January, more than tripling the 50K street estimate, while the December decline was revised upward to -78K from -123K. US ISM Non-Manufacturing PMI is due at 10:00 am EDT with the street expecting the headline number to hold steady at 57.5.

As more and more earnings reports roll out, results have become increasingly mixed. Companies who reported positive news overnight and this morning include: ($14.09 vs street $7.23, CEO Jeff Bezos to step down but remain as Chair, sales topped $100 million for the first time), Alphabet (Google) ($22.30 vs street $15.90, up 7.6% premarket), Freeport McMoRan (reinstated dividend 50% higher than it was before it was suspended last year),

Companies who posted disappointing news include: Amgen (sales growth to slow to 3% in 2021 from 9% in 2020, paused or ended 3 cancer related clinical trials), Chipotle Mexican Grill ($3.48 vs street $3.73), and Spotify (-$0.79 vs street -$0.69, down 6.9% premarket)

Commodities are also picking up for the most part with WTI Crude Oil up 1.0%, and copper up 0.5%. Precious metals are also climbing with Gold up 0.4%, Silver up 2.3% and Platinum gaining 1.3%.

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Colin Cieszynski, Chief Market Strategist

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

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