Morning Minutes

Stocks Slide, Oil Plunges as Growing Covid Delta Cases Rock Markets




Equity markets around the world are off to a rocky start this week with US index futures down 0.9% to 1.4%, the Dax and FTSE down 2.8% and 2.5% respectively in European trading, with the Nikkei and Hang Seng down 1.2% and 1.8% in Asia Pacific trading. Investors continue to either ignore or are taking profits against last week’s positive US earnings and US retail sales reports and this week’s UK reopening and OPEC+ deal. It appears at this point that new surges in delta variant COVID cases in several countries have rattled sentiment by reminding investors that the road to recovery could be bumpier than previously thought.

Energy contracts are heading in opposite directions this morning with WTI crude oil plunging 3.5% and natural gas rallying 2.5%. Oil has been under pressure despite OPEC+ coming to a deal over the weekend to restore 400,000 bl/d of production to the market per month from August 2021 through September 2022, at which point all of the previous cuts would be restored, and confirming supplier discipline in the market.

Earnings season resumes this evening with results from IBM. Results continue to come from banks but also broaden out into more sectors including railroads, drillers, consumer products and semiconductors. Other headliners this week include Netflix on Tuesday, Coca-Cola on Wednesday, Intel and Twitter on Thursday, and American Express on Friday. Earnings also start to trickle out from Canadian companies this week including Canadian National Railway on Tuesday, Rogers Communications on Wednesday and Air Canada on Friday.

It’s a quiet week for economic news. The Peoples Bank of China is meeting tonight and then most of the week is dominated by housing related numbers until Friday when flash PMI reports from around the world and Canada retail sales are due.

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Colin Cieszynski, Chief Market Strategist

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

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