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3 April 2019

03/04/2019

Morning Chat and Market Data

Morning Chat 

More glass half full: Equity markets kicked of the second quarter rallying rather than sliding. The FTSE100 rose 0.61%, DAX 1.41%, CAC 0.63% and Italian MIB 1.19% while across the pond the US S&P500 rallied 1.16%. It seems confidence data trumps hard reports. The Chinese Caixin Manufacturing PMI triggered the initial optimism coming in at 50.8 versus 50.0 expected. Germany’s Manufacturing PMI was disappointing at 44.1, but the strong 1.0% US construction spending (when weather concerns fostered a negative view) building on the 55.3 ISM manufacturing score (versus 54.5 expected) outdid weak US retail sales for the optimistic equity tilt.

Suffering and suffrage may not be connected etymologically, but… Last night was indicative vote night II, with a decent menu for Speaker John Bercow to select from. Some, variations on a customs union theme, were not all going to get selected. Ultimately, he chose four: Ken Clarke’s Custom Union, so close last time was closer still, but fell by three votes. Nick Boles’ idea to remain in the single market and seek a temporary customs union failed so he resigned the conservative whip. Public vote? Nope. Parliament to choose? Nope. So we’re no closer to an answer – only a deadline.

Erdogan stuffed in Turkey: The Turkish Lira slid 3.15% against the dollar yesterday, while the Borsa Istanbul 100 index climbed 0.34% on news Turkish President Recep Tayyip Erdoğan and his AK party were losing the vote in the big cities thanks to poor economic conditions. While the AK party (AKP) and allies retained 51.6% of the vote overall, they were propped up by conservative rural voters. However, the AKP admitted defeat in many major municipalities – some of Turkey’s largest – including the capital Ankara, holiday centre Antalya and the agriculturally important Adana. The AKP could even lose Erdoğan’s home town Istanbul.

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +13.40 (+1.10%) at 1,231 (YTD: 13.66%; 5YR: 52.9%)
MSCI AC World Equities (USD) up +100.27 (+1.15%) at 8,855 (YTD: 13.94%; 5YR: 43.2%)
Barclays Global Aggregate Bonds down -1.54 (-0.32%) at 488 (YTD: 1.88%; 5YR: 5.3%)

Selected Equity Indices (Capital returns)
S&P 500 up +32.79 (+1.16%) at 2,867 (YTD: 14.37%; 5YR: 51.6%)
NASDAQ up +99.59 (+1.29%) at 7,829 (YTD: 17.99%; 5YR: 83.1%)
Euro STOXX 50 up +33.67 (+1.00%) at 3,385 (YTD: 12.79%; 5YR: 6.2%)
FTSE 100 up +38.19 (+0.52%) at 7,317 (YTD: 8.76%; 5YR: 9.9%)
CAC 40 up +55.00 (+1.03%) at 5,406 (YTD: 14.27%; 5YR: 22.0%)
DAX up +155.95 (+1.35%) at 11,682 (YTD: 10.64%; 5YR: 21.4%)
Nikkei 225 down -3.72 (-0.02%) at 21,505 (YTD: 7.45%; 5YR: 43.9%)
Hang Seng up +20.77 (+0.07%) at 29,583 (YTD: 14.46%; 5YR: 31.3%)
MSCI Emerging Markets up +11.96 (+1.13%) at 1,070 (YTD: 10.80%; 5YR: 6.5%)

Selected Government Bond Yields
US 10 Year down -0.03 at 2.47 (began the year at 2.68; 5 years ago it was 2.80)
US 2 Year down -0.03 at 2.30 (began the year at 2.49; 5 years ago it was 0.45)
UK 10 Year up +0.05 at 1.05 (began the year at 1.28; 5 years ago it was 2.77)
Germany 10 Year down -0.01 at -0.04 (began the year at 0.24; 5 years ago it was 1.62)
France 10 Year down -0.01 at 0.36 (began the year at 0.70; 5 years ago it was 2.14)
Italy 10 Year up +0.00 at 2.51 (began the year at 2.74; 5 years ago it was 3.31)
Japan 10 Year down -0.02 at -0.10 (began the year at -0.01; 5 years ago it was 0.62)
Barclays EM Basket up +0.03 at 6.03 (began the year at 6.22; 5 years ago it was 5.76)

Selected Currencies
$ strengthened +0.0002 versus € (+0.02%) at 1.1204 ($: YTD: 2.17%; 5YR: 18.6%)
€ strengthened +0.0054 versus £ (-0.46%) at 1.1653 (€: YTD: -4.49%; 5YR: 3.7%)
$ strengthened +0.0064 versus £ (+0.49%) at 1.3055 ($: YTD: -2.42%; 5YR: 21.5%)
¥ strengthened +0.0700 versus $ (+0.06%) at 111.3500 (¥: YTD: 1.52%; 5YR: -6.8%)

Selected Commodities
Brent Crude ($/bbl) down -0.05 (-0.07%) at 68.94 (YTD: 29.66%; 5YR: -33.7%)
WTI Crude ($/bbl) up +1.45 (+2.41%) at 61.59 (YTD: 35.63%; 5YR: -38.3%)
Gold ($/ozt) up +0.32 (+0.02%) at 1288.07 (YTD: 0.44%; 5YR: -0.1%)
Copper ($/mt) down -11.50 (-0.18%) at 6471.00 (YTD: 8.48%; 5YR: -2.8%)

Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return

 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros