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1 April 2019

01/04/2019

Morning Chat and Market Data

Morning Chat 

20-year olds will never have seen this: We’ve had a good start to 2019. The S&P500, the first quarter recovery (which actually came as a Christmas present starting Christmas Eve) is the best first quarter start since 1998. The US index is up 13.07% year-to-date although it remains 3.61% below the last year’s 2940.91 high. Meanwhile, here in Europe, the UK FTSE100 is up 8.19% for 2019, with DAX up 9.16%, CAC up 13.10% and MIB up a whopping 16.17%. Asia has also seen a solid recovery with the Hang Seng up 12.40% although the Topix has only managed 6.53%.

Yielding to the wrong sentiment? Equity investors pushed markets mainly on a belief US-China trade talks will yield results. Returns for individual indices have been tempered by concerns for individual economies such as Germany’s auto sector slippage, and UK’s Brexit. Bond markets, however, appear less optimistic. The first quarter saw yields fall, with the US 10-year yield dropping ¼ percent this year to 2.40% - a near 15 months low – and for a time in March below the 3-month yield and inverting the yield curve. The UK 10-year yield also fell and is 0.997% - a near two year low.

So which way’s right?The US Federal Reserve, commenting on the rates outlook, held the view the US economy was still on a solid footing. Equity markets agree, but bond markets are less sanguine. In Europe, the European Central Bank’s early-March reactivation of the Targeted Longer-Term Refinancing Operations stimulus program, and slippage of US data hurt sentiment. This week coming has an opportunity for good news. US non-farm payrolls may show last month was a blip, while retail sales and durables could help. European Markit PMI data may show a recovery in sentiment, while German industrial output may be telling.

On Friday the Wells Fargo price change showed as XXX%, it should have been +0,64%
If anyone tells you Trump has resigned, remember it’s April 1st. Theresa May on the other hand…

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +8.26 (+0.68%) at 1,218 (YTD: 12.43%; 5YR: 51.7%)
MSCI AC World Equities (USD) up +54.02 (+0.62%) at 8,754 (YTD: 12.65%; 5YR: 41.9%)
Barclays Global Aggregate Bonds down -0.52 (-0.11%) at 489 (YTD: 2.20%; 5YR: 5.4%)

Selected Equity Indices (Capital returns)
S&P 500 up +18.96 (+0.67%) at 2,834 (YTD: 13.07%; 5YR: 50.3%)
NASDAQ up +60.16 (+0.78%) at 7,729 (YTD: 16.49%; 5YR: 81.1%)
Euro STOXX 50 up +31.42 (+0.95%) at 3,352 (YTD: 11.67%; 5YR: 5.2%)
FTSE 100 up +44.86 (+0.62%) at 7,279 (YTD: 8.19%; 5YR: 9.4%)
CAC 40 up +53.99 (+1.02%) at 5,351 (YTD: 13.10%; 5YR: 20.9%)
DAX up +97.88 (+0.86%) at 11,526 (YTD: 9.16%; 5YR: 20.0%)
Nikkei 225 up +303.22 (+1.43%) at 21,509 (YTD: 7.47%; 5YR: 45.4%)
Hang Seng up +459.41 (+1.58%) at 29,511 (YTD: 14.18%; 5YR: 31.5%)
MSCI Emerging Markets up +12.91 (+1.24%) at 1,058 (YTD: 9.56%; 5YR: 5.7%)

Selected Government Bond Yields
US 10 Year up +0.04 at 2.44 (began the year at 2.68; 5 years ago it was 2.75)
US 2 Year up +0.04 at 2.30 (began the year at 2.49; 5 years ago it was 0.43)
UK 10 Year unchanged at 1.00 (began the year at 1.28; 5 years ago it was 2.73)
Germany 10 Year up +0.00 at -0.07 (began the year at 0.24; 5 years ago it was 1.57)
France 10 Year down -0.01 at 0.31 (began the year at 0.70; 5 years ago it was 2.10)
Italy 10 Year down 0.00 at 2.48 (began the year at 2.74; 5 years ago it was 3.29)
Japan 10 Year down -0.01 at -0.10 (began the year at -0.01; 5 years ago it was 0.62)
Barclays EM Basket down -0.03 at 6.00 (began the year at 6.22; 5 years ago it was 5.77)

Selected Currencies
$ weakened -0.0015 versus € (-0.13%) at 1.1236 ($: YTD: 1.89%; 5YR: 18.6%)
€ weakened -0.0055 versus £ (+0.47%) at 1.1636 (€: YTD: -4.35%; 5YR: 3.6%)
$ weakened -0.0080 versus £ (-0.62%) at 1.3073 ($: YTD: -2.57%; 5YR: 21.5%)
¥ weakened -0.3500 versus $ (-0.32%) at 111.1200 (¥: YTD: 1.31%; 5YR: -6.8%)

Selected Commodities
Brent Crude ($/bbl) up +0.62 (+0.92%) at 68.13 (YTD: 28.14%; 5YR: -34.8%)
WTI Crude ($/bbl) up +0.84 (+1.42%) at 60.14 (YTD: 32.44%; 5YR: -40.9%)
Gold ($/ozt) down -2.38 (-0.18%) at 1289.92 (YTD: 0.58%; 5YR: 0.9%)
Copper ($/mt) up +122.50 (+1.93%) at 6482.50 (YTD: 8.68%; 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