Morning Minutes

Social Media Earnings, Flash PMI and Retail Sales In The Spotlight



Stock markets around the world continue to rebound this morning with investors responding positively to earnings reports and economic news. US index futures are up 0.3%-0.5%, while the FTSE is up 0.8% and the Dax is up 1.0%. Oil is flat while copper is up 0.8%. Precious metals are struggling with gold and silver both down 0.6% and platinum down 1.1%, a sign of improving investor confidence and decreasing fear.

Social media stocks are climbing in premarket action, led by Twitter ($0.20 vs street $0.07, up 4.5% premarket) and Snap (+$0.10 vs street -$0.01, up 17.2% premarket), both of whom exceeded expectations with their latest results. Other US companies beating the street today include American Express ($2.80 vs street $1.66, up 3.4% premarket), Schlumberger ($0.30 v street $0.26), and Honeywell ($2.02 vs street $1.94). Intel is down 2.2% premarket despite beating on earnings ($1.28 vs street $1.06) after suggesting the current semiconductor sector supply problems could continue into 2023.

North of the border, Air Canada continues to struggle but showed some signs of improvement. June quarter revenues of $837M were up over 50% from $527M in the March quarter. Seat capacity remains low, however, and the airline still lost over $1 billion in the quarter. Management noted that the removal of some travel restrictions has helped demand to start to rebound.

Speaking of lockdowns and consumer spending. Canadian retail sales for May dropped 2.1% in May which was not as bad as April’s 5.6% plunge, or the -3.0% May street estimate, with lockdowns in place across the country through the month. For a preview of what may be to come, however, UK retail sales bounced back 0.5% in June from a 1.3% drop in May as its economy started to reopened from its own round of lockdowns last month.

Flash PMI reports are out from Europe this morning. Germany was a bit better than expected while France and the UK were a bit worse than expected but overall, the numbers for both the manufacturing and service sectors were running into the high 50s to mid 60s, with many of the numbers up from last month, indicating a growing and strengthening European economy. US Flash manufacturing (street 62.0 vs previous 62.1) and flash services (street 64.8 vs previous 64.6) are due at 9:45 am EDT.  

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Colin Cieszynski, Chief Market Strategist

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

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