Morning Minutes

Steady Markets Digest More Earnings While Awaiting Friday Payrolls




US index futures are up flat to up 0.1% today as investors consider yesterday’s 0.3% advance to an all-time high close for the Dow alongside a 0.3% decline for the NASDAQ. Overseas, major European indices are essentially flat trading between -0.2% and +0.2%. In Asia Pacific trading, the Nikkei rallied 1.8% while the Hang Seng gained 0.7%. Commodity trading is mixed today with WTI crude oil pulling back 0.8% while copper is up 0.8%.

Earnings reports out of the US were mixed. Companies beating expectations included: Paypal ($1.22 vs street $0.99), COVID treatment producer Regeneron ($9.89 vs street $9.00), and ViacomCBS ($1.52 vs street $1.22). Luxury brands retailer Tapestry (Coach) announced that its sales have returned to pre-pandemic levels and beat the street on earnings ($0.51 vs street $0.31). In Canada, Manulife* ($0.82 vs street $0.77), Magna* ($1.86 vs street $1.57), Sun Life ($1.45 vs street $0.89) all beat analyst estimates as well.

Several companies in the US posted mixed to disappointing numbers. Covid vaccine producer Moderna, for example, beat on earnings ($2.84 vs street $2.39) but missed on sales ($1.94B vs street $2.03B). Results from Uber were also mixed with revenues weaker than expected ($2.9B vs street $3.3B), but losses not as bad as feared (-$0.06 vs street -$0.54). Etsy is down 11.0% premarket despite stronger than expected earnings ($1.00 vs street $0.88) after management warned that the pace of sales growth may slow in the coming quarter.

Earnings headliners for later today and tomorrow morning in Canada include West Fraser Timber*, Interfor, Cineplex, Cenovus*, Air Canada, Enbridge, Cameco, and many others, particularly resource companies. In the US, Wayfair, Beyond Meat, and Tripadvisor report later today.

In economic news, the Bank of England maintained its benchmark interest rate and asset purchase target but hinted that with the UK economy improving it could start to slow the pace of asset purchases like the Bank of Canada did recently.

8:30 am EDT Friday brings the monthly US nonfarm payrolls (street 978K vs previous 916K), and Canadian employment (-175K vs previous 303K) reports for April. Recent US employment numbers have been mixed with ADP payrolls strengthening but not as fast as the street had hoped, while US weekly jobless claims fell below 500K to 498K from 590K last week and better than the 540K street estimate. In Canada, the imposition and deepening of new lockdowns in several provinces over the last few weeks may impact/distort job numbers for April and potentially May as well.

*Shares of Manulife, Magna, West Fraser Timber, and Cenovus are held in portfolios managed by SIA Wealth Management.

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Colin Cieszynski, Chief Market Strategist

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

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