Morning Minutes

World Markets Digest Yesterday’s Major Moves and China Reopening




Although markets are open today it is a partial holiday in other sectors for Veterans Day / Remembrance Day in North America. Because of this, economic and corporate news has been very quiet overnight and into this morning. The only notable economic report due today is the University of Michigan consumer 5-year inflation estimate (previous 2.9%).

The biggest development overnight has been news of China starting to potentially back away from its “Zero COVID” policy and easing a number of restrictions on travel and other activities. WTI Crude oil is up 2.7% and copper is up 2.9% on this development which changes investors’ outlook toward demand for resources.

A quiet day for news leaves investors to continue digesting yesterday’s better than expected US Consumer Price Index Report, which sparked a major rally in US indices, including a 7.3% pop for the NASDAQ, a drop in the US 10-year treasury note yield from near 4.1% toward 3.8%, where it remains this morning, and a sharp downturn for the US Dollar which ignited rallies in Gold, other currencies, and commodities.

Yesterday’s rally came on higher volumes with the NYSE trading about 25% more shares than its 20-day average and NASDAQ trading about 50% more shares than its 10-day average. The big question is whether this was a bear market rally or short squeeze or the start of a more sustainable trend. Due to the partial holiday today, volumes may be lighter so investors may not get a better handle on the significance of yesterday’s action until next week.

So far today, we are seeing moderate follow-through in equity market trading with the three main US index futures contracts up 0.4% to 0.6%.  In Europe today, the Dax is up 0.4%, but the FTSE is down 0.4%. The US Dollar is down again against most currencies; gold is up 0.6%, the Canadian Dollar is up 0.3%, the Pound is up 0.6%, and the Euro is up 1.0%.

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Colin Cieszynski, Chief Market Strategist

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

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