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STOCKS SLIDE AS FLASH PMI NUMBERS REFLECT LOCKDOWN DRAG ON ECONOMIES

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Despite the general tone of news flow remaining positive, stock markets around the world are pulling back ahead of the weekend. Part of this may be a shift in sentiment from anticipation to realization now that the Biden Inauguration is over, US politicians are getting down to work and earnings season is underway.

US index futures are all down about 0.7% with Dow futures down about 240 points coming off of an essentially flat Thursday. NASDAQ futures are down 0.6% erasing yesterday’s 0.5% gain. Major European indices are down across the board with Milan falling 1.9%, Frankfurt down 0.6% and London losing 0.8%.

The ongoing tug of war between concerns about the negative impact of near-term lockdowns and hopes for a long-term recovery as vaccines roll out appears to have tipped to the bearish side for the moment, amid reports of delays on vaccine shipments and flash PMI reports. The first, early look at the January economy for Europe (Manufacturing 50.8 vs street 50.3, Service 47.5 vs street 47.6) split with manufacturing near the 50.0 line and services below 50 in contraction territory. Results from the UK were similar and came in below expectations, with services particularly disappointing (Manufacturing 52.9 vs street 54.0, Services 38.8 vs street 45.0).

US flash PMI reports are due at 9:45 am today with the street expecting both Manufacturing (street 56.5 vs previous 57.1) and Services (street 53.8 vs previous 54.8) to show some slowing but also to remain above 50 in expansion territory. Canadian retail sales beat expectations but the report was for November, before the latest round of lockdowns really took hold.

Amid soft flash PMI reports and bulls taking a day off, commodities are trading lower this morning with WTI crude oil down 3.1%, natural gas down another 1.9% and copper falling 2.2%. This US dollar is on the rebound this morning, knocking gold and silver down 1.5% and 2.6% respectively.

Several companies are trading down in premarket action today despite releasing positive earnings reports, suggesting that following several months of gains, some investors may be looking to take profits against news. Today’s headliners include: IBM (down 8.2%, premarket EPS $2.07 vs street $1.79), Intel (down 4.8% premarket,  EPS $1.52 vs street $1.10, 5% dividend increase), Seagate Technology (down 4.5% premarket, EPS $1.29 vs street $1.13), and railroad CSX (down 2.2% premarket, EPS $1.04 vs street $1.01). Canada’s Sierra Wireless is up 8.7% in US premarket action after announcing the start of a leadership transition with its current President and CEO planning to step down at the end of June.

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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