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11 April 2019

11/04/2019

Morning Chat and Market Data

Morning Chat 

Half-way better: The current Bank of England estimate – echoed by the IMF – for UK GDP growth in 2019 is 1.2%. Yet the Office of National Statistics month-on-month GDP estimate for February yesterday notes growth of +0.2% with January +0.5%. Things appear to be running better than expected. Moreover, February industrial production came in at +0.6% again versus 0.1% estimated, with manufacturing output up 0.9% versus 0.2% expected (+0.8% last month) and construction output actually grew 0.4% when expected to decline 0.4%. While rising inventory levels for Brexit are partially to blame, amidst the gloomy politics there’s some reason for cheer.

Good start: The earnings season is starting. US banks will announce on later this week, but today a couple UK companies started off on the right foot. Tesco saw its shares rally 3.59% to lead the FTSE100 names (although the index slipped 0.15%) on news they boosted their dividend substantially thanks to a more than one third increase in annual profits. In the AIM index, Asos leapt 7.84% (at one point 17%) on a 14% increase in revenues, a robust self-help programme, and slowing capex, although they couldn’t compete with a raft of small AIM oil stocks that were gushing.

And from our Washington correspondent: The S&P500 edged slightly higher yesterday rising 0.39% with the Nasdaq Composite up 0.69% on various incremental pieces of good news. Treasury Secretary Steven Mnuchin stated an enforcement mechanism was “pretty much agreed” for the US-China trade deal (though did not confirm if it included tariffs). The US government budget deficit tapered to only $147billion (only) – it had been expected to be $180billion. The Federal Reserve’s FOMC minutes reinforced the expectation that the Fed will be patient with rates this year. Finally, underlying core inflation remains benign despite the food-inflation-driven rise in the overall rate.

The EU granted an extension to October 31 – apparently without “naughty schoolboy” conditions wanted by French President Macron – but EU elections must be held or we’re out June 1.
ConAgra Brands leapt 6.79% on strong guidance update

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +2.62 (+0.21%) at 1,244 (YTD: 14.78%; 5YR: 59.0%)
MSCI AC World Equities (USD) up +20.82 (+0.23%) at 8,930 (YTD: 14.90%; 5YR: 48.6%)
Barclays Global Aggregate Bonds up +0.63 (+0.13%) at 489 (YTD: 2.15%; 5YR: 4.1%)

Selected Equity Indices (Capital returns)
S&P 500 up +10.01 (+0.35%) at 2,888 (YTD: 15.21%; 5YR: 59.1%)
NASDAQ up +54.97 (+0.69%) at 7,964 (YTD: 20.03%; 5YR: 99.1%)
Euro STOXX 50 up +7.43 (+0.22%) at 3,425 (YTD: 14.10%; 5YR: 9.9%)
FTSE 100 down -3.66 (-0.05%) at 7,422 (YTD: 10.31%; 5YR: 13.1%)
CAC 40 up +13.46 (+0.25%) at 5,450 (YTD: 15.20%; 5YR: 24.8%)
DAX up +55.34 (+0.47%) at 11,906 (YTD: 12.76%; 5YR: 27.8%)
Nikkei 225 up +23.81 (+0.11%) at 21,711 (YTD: 8.48%; 5YR: 55.5%)
Hang Seng down -217.50 (-0.72%) at 29,902 (YTD: 15.69%; 5YR: 30.0%)
MSCI Emerging Markets up +2.61 (+0.24%) at 1,096 (YTD: 13.49%; 5YR: 7.9%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.48 (began the year at 2.68; 5 years ago it was 2.62)
US 2 Year up +0.01 at 2.33 (began the year at 2.49; 5 years ago it was 0.36)
UK 10 Year down -0.01 at 1.10 (began the year at 1.28; 5 years ago it was 2.61)
Germany 10 Year up +0.02 at 0.00 (began the year at 0.24; 5 years ago it was 1.50)
France 10 Year up +0.02 at 0.34 (began the year at 0.70; 5 years ago it was 2.01)
Italy 10 Year down -0.01 at 2.39 (began the year at 2.74; 5 years ago it was 3.21)
Japan 10 Year unchanged at -0.06 (began the year at -0.01; 5 years ago it was 0.60)
Barclays EM Basket up +0.01 at 5.99 (began the year at 6.22; 5 years ago it was 5.71)

Selected Currencies
$ weakened -0.0003 versus € (-0.03%) at 1.1279 ($: YTD: 1.51%; 5YR: 18.8%)
€ strengthened +0.0027 versus £ (-0.23%) at 1.1602 (€: YTD: -4.07%; 5YR: 3.9%)
$ strengthened +0.0028 versus £ (+0.21%) at 1.3085 ($: YTD: -2.66%; 5YR: 21.8%)
¥ weakened -0.2500 versus $ (-0.23%) at 111.1200 (¥: YTD: 1.31%; 5YR: -8.6%)

Selected Commodities
Brent Crude ($/bbl) down -0.08 (-0.11%) at 71.15 (YTD: 33.82%; 5YR: -33.2%)
WTI Crude ($/bbl) up +0.63 (+0.98%) at 64.61 (YTD: 42.28%; 5YR: -37.5%)
Gold ($/ozt) down -0.98 (-0.08%) at 1307.12 (YTD: 1.92%; 5YR: -0.9%)
Copper ($/mt) down -23.00 (-0.35%) at 6464.00 (YTD: 8.37%; 5YR: -2.9%)

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